Carried forward concessional contributions can be a useful tool for individuals who want to boost their superannuation savings. Individuals can make concessional contributions up to a certain limit each financial year, with the current limit set at $27,500 for the 2021-22 financial year. Concessional contributions are taxed at a lower rate of 15% compared to an individual’s marginal tax rate.

However, if an individual does not use up their entire concessional contributions cap in a financial year, they can carry forward the unused amount for up to five years. This means that they can make additional concessional contributions in future years to catch up on any unused amounts from previous years.

For example, if John had a concessional contributions cap of $27,500 in the 2021-22 financial year but only made concessional contributions of $20,000, he could carry forward the remaining $7,500 and add it to his concessional contributions cap for the following year. If John makes concessional contributions of $35,000 in the 2022-23 financial year, he would have effectively used up his concessional contributions cap for both years ($20,000 + $27,500 + $7,500).

It’s important to note that there are eligibility requirements and restrictions around carried forward concessional contributions. Only individuals with a total superannuation balance of less than $500,000 at the end of the previous financial year are eligible to carry forward unused concessional contributions. Additionally, the unused amounts can only be carried forward for up to five years and must be used before they expire.

In conclusion, carried forward concessional contributions can be a useful strategy for individuals who want to boost their superannuation savings and take advantage of unused concessional contributions from previous years. If you require more assistance on this matter, please contact our office at 03 9973 5905.