The final in our series on the changes to superannuation now focuses on the “catch up provisions” that come into effect from 1 July 2017, but can only really be accessed from 1 July 2018.
The catch up provisions allow individuals that meet certain criteria to “bank unused concessional contributions” for up to 5 years. Remember concessional contributions are contributions a tax deduction can be claimed for.
From 1 July 2017 the cap on these contributions is now $25,000 per person, down from $30,000 for people under 49 and $35,000 for persons aged 50 or more in the 2017 financial year. You may recall …..from the last newsletter. Rob earns $100,000 plus $9,500 compulsory 9.5% superannuation. Rob also has less than $500,000 in total superannuation. We will also assume that Rob does not make any contributions to super, other than the compulsory employer contributions for 5 years. A table shows how this will work:
| 2018/ 2019 | 2019/ 2020 | 2020/ 2021 | 2021/ 2022 | 2022/ 2023 | |
| Annual concessional cap | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 |
| Concessional contributions | $9,500 | $9,500 | $9,500 | $9,500 | $9,500 |
| Unused concessional cap | $15,500 | $15,500 | $15,500 | $15,500 | $15,500 |
| Accumulated unused cap | $15,500 | $31,000 | $46,500 | $62,000 | $77,500 |
In year 5 (2022/2023 year) Rob now has $77,500 in accumulated unused concessional contributions, meaning that Rob can contribute up to $77,500 on top on his other contributions for that financial year and claim a tax deduction. This could come in very handy if Rob were to make a capital gain on another asset (eg rental property) in that financial year. Remember Rob can access his unused cap at any time. However, in the above example, if Rob didn’t use any of the unused cap in the 2022/2023 year, he would start in the 2023/2024 year with an unused cap of only $62,000 as 2018/2019 is no longer available to him. It should also be noted that if your considering taking advantage of the above rule changes that your contact us because the use of the above cap can be more complicated than in the simple illustration above. This is the last in in our super series. Should you have any queries please feel free to contact me.
This article written by Peter Gill, appeared in our July 2017 newsletter.
