DFK Gooding Partners
June 17, 2024
Catch up contributions may be available to taxpayers who have a total balance in superannuation of less than $500,000 at the end of the previous financial year. If you qualify, you may be able to utilize your unused concessional contributions cap and make catch up concessional contributions.
These measures were introduced in 2018 and the first year a member may make a catch-up contribution was the 2019/2020 financial year. Five years is the maximum any unused contribution cap amounts can be carried forward.
The measures benefit those with intermittent working patterns such as those who are self-employed or those who go on maternity and paternity leave for a period of time and then re-commence full time work in the future.
Other strategic tax planning opportunities lie with making personal concessional contributions in the year of a large capital gain to negate the potential tax payable or using those on lower tax rates such as adult children as a way of offsetting trust distributions.
Careful planning needs to be undertaken to ensure the person has enough taxable income to deduct the additional concessional contributions against.
Division 293 tax consequences maybe another issue for consideration in making a catch up payment of concessional contributions. Division 293 tax applies if the person’s adjusted taxable income in the year of contribution is above the $250,000 threshold.
Contribution caps for the 2025 Financial Year
Various contribution caps impose restrictions on the amount of super contributions that can be made by, or in respect of, a taxpayer during a particular income year. Importantly, these caps have increased in the 2025 income year (due to indexation) as follows:
- Concessional (deductible) contributions cap — from 1 July 2024, this cap has increased to $30,000 (from $27,500 in the 2024 income year);
- Non-concessional (non-deductible) contributions cap — from 1 July 2024, this cap has increased to $120,000 (from $110,000 in the 2024 income year);
- CGT small business concessions contribution cap — this cap has increased to $1.78 million for the 2025 income year (from $1.705 million in the 2024 income year).
Concessional Catch-up Example
The following example, demonstrates how the catch-up concessional contributions would work practically.
Phillip is 54 and has $350,000 in his super fund and considering making additional concessional contributions (CC) into that fund in the 2023/2024 financial year, as he has sold an investment property with a large capital gain and would like to use the contributions to reduce his taxable income. His concessional contributions in the prior years and unused amounts accrued since 2018/2019 are summarised below:
| FY | CC | CC Cap | Unused CC | Carried forwards |
|---|---|---|---|---|
| 2019 | $10,000 | $25,000 | $15,000 | $15,000 |
| 2020 | $11,000 | $25,000 | $14,000 | $29,000 |
| 2021 | $12,000 | $25,000 | $13,000 | $42,000 |
| 2022 | $13,000 | $25,000 | $12,000 | $54,000 |
| 2023 | $14,000 | $27,500 | $13,500 | $67,500 |
Based on the above information, Phillip could contribute catch up concessional contributions of $67,500, plus the 2023/2024 annual cap amount of $27,500, meaning a total of $95,000.
Cutoff dates for member transactions
If you want to make a personal contribution to your super account before the end of the 2023/24 financial year, we recommend you submit it by Friday 21 June 2024 to allow sufficient time to be received and allocated to your account by 30 June 2024.
If you intend to claim a tax deduction for last financial year (FY2022/23), this must be received on or before you lodge your FY2022/2023 tax return, or on or before 30 June 2024.
If you require assistance with increasing your concessional contributions into your SMSF, please contact us below.
Contact us
Complete the quick contact form below with your details and one of our team will be in touch to discuss your requirements. Alternatively, you can call us (08) 9327 1777 or email info@dfkgpca.com.au.
