Carry-Forward Super Contributions: The Ultimate Tax Catch-Up

Most Australians know there is a limit on how much "pre-tax" money they can put into super each year. But what many don't realise is that if you haven't hit that limit in previous years, those "leftover" amounts don't just disappear—they wait for you.

The Carry-Forward (or Catch-Up) Concessional Contribution strategy allows you to dip into unused caps from the past five years to make a much larger contribution today. This is a game-changer for people who have had a break from the workforce or those who have suddenly come into a high-income year, potentially saving you between $3,000 and $10,000 in tax.

How Carry-Forward Contributions Work

Every year, there is a "Concessional Contribution Cap" (the total of your employer's SG contributions, any salary sacrifice, and personal deductible contributions). For the 2024–25 and 2025–26 financial years, this cap is $30,000.

• The 5-Year Rolling Window: If you only used $10,000 of your cap three years ago, you have $20,000 of "unused space" that has been carried forward. You can look back at your unused caps from as far back as the 2019–20 financial year.

• The "Super-Sized" Deduction: By combining this year's $30,000 cap with your unused amounts from the last five years, you could potentially contribute and claim a tax deduction on a much larger sum (sometimes over $100,000) in a single year.

• The Tax Arbitrage: Instead of paying your marginal tax rate (which could be up to 47%) on that money, you only pay 15% within the super fund.

Is This Strategy Right for You?

This is an intermediate strategy that is particularly powerful for those who haven't always been able to maximise their super. It is best for:

• People with "Lumpy" Income: If you’ve sold an asset (like shares or property) and have a large capital gain, a massive carry-forward contribution can offset that gain and slash your tax bill.

• Returning to Work: If you’ve taken time off for study or to raise a family, you likely have years of untouched caps waiting to be used.

• Modest Super Balances: To use this rule, your Total Super Balance (TSB) must be under $500,000 as of 30 June of the previous financial year.

Important Risks and Rules

The ATO has very strict "gatekeeper" rules for this strategy, and the calculations can get complex:

• The $500,000 Hard Limit: If your total super balance across all funds is $500,001 on June 30, you lose the ability to use carry-forward amounts for the entire following year. It is a strict "cliff" threshold.

• Caps Expire: Unused cap amounts only last for five years. For example, any unused space from the 2019–20 year will expire at midnight on 30 June 2025. Use it or lose it!

• Notice of Intent: If you are making a personal contribution (rather than salary sacrifice), you must lodge a "Notice of Intent to Claim a Deduction" with your super fund and receive an acknowledgement before you lodge your tax return.

• Don't Forget Employer Super: Your employer’s 11.5% (increasing to 12% from 1 July 2025) Super Guarantee counts toward your $30,000 cap. You must subtract their contributions first to see how much "space" you actually have left.

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