• Changes to concessional (pre-tax) contributions

    Concessional (pre-tax) contributions to your super include:

    • employer contributions
    • any amount you salary sacrifice* into super
    • personal contributions you claim as a personal super contribution deduction

    From 1 July 2017, the 10% ‘maximum earnings’ condition for personal super contributions deductions no longer applies.

    *Not all employers offer salary sacrifice arrangements.

    Concessional contributions cap

    As concessional contributions are paid before tax is applied, it means that your super fund pays 15% tax on the contribution when it is paid to them.

    From 1 July 2017, the concessional contributions cap is $25,000 for everyone. Previously, it was $35,000 for people 49 years and older at the end of the previous financial year and $30,000 for everyone else. The new cap will be indexed in line with average weekly ordinary time earnings (AWOTE), rounded down to the nearest $2,500.

    The intent of this change is to better target tax concessions to ensure the super system is equitable and sustainable.

    Carry-forward of unused concessional contributions

    From 1 July 2018, you will be able to 'carry-forward' any unused concessional contributions cap. You will be able to access your unused concessional contributions cap on a rolling basis for five years. Amounts carried forward that have not been used after five years will expire.

    The first financial year in which you can access unused concessional contributions is 2019–20.

    You will only be able to carry-forward your unused concessional contributions cap if your total superannuation balance at the end of 30 June of the previous financial year is less than $500,000.

    The intent of this change is to improve the flexibility of the super system.

    What you can do

    What you can do before 30 June 2017

    Situation

    Action

    If you want to make extra concessional contributions

    • Check what concessional contributions have been made to all your super funds from 1 July 2016.
    • Estimate the amount of employer contributions that will be made for you before 30 June 2017 and how much you are contributing through salary sacrifice. You can use our Estimate my super tool to work this out.
    • Arrange for the additional concessional contributions, up to your age cap, to be paid to your super account before 30 June 2017.

     

    What you can do from 1 July 2017

    Situation

    Action

    If you want to make extra concessional contributions

    Make sure that when you add up your concessional contributions you do not exceed $25,000 in concessional contributions during the year.

    What you can do from 1 July 2018

    Situation

    Action

    If you have a total superannuation balance of less than $500,000 at the end of 30 June of the previous year

    • You can start to 'carry-forward' your unused concessional contributions cap.
    • The first year in which you can access unused concessional contributions that you have carried forward is 2019–20.

     

    Examples

    Main points

    Example

    • 55 years old
    • Employer contributions are $15,000 per year
    • Salary sacrifices $15,000 per year

     

    Bob’s employer makes employer contributions of $15,000 each year and Bob salary sacrifices $15,000 per year.

    At 1 March 2017, Bob thinks he can contribute another $5,000 to his super, so he talks to his employer and arranges for an extra $1,000 per month to be salary sacrificed into his super. He wants to take advantage of the higher contribution cap available until 30 June 2017.

    On 1 July 2017, Bob’s concessional cap will be $25,000 per year. Bob realises that the total of his current employer contributions and salary-sacrificed amounts will be more than $25,000, so he reduces his salary-sacrificed contributions to $10,000 per year. This ensures he doesn't exceed his concessional contribution cap.

    • Employer contributions are $10,000 in 2018–19
    • Total superannuation balance on 30 June 2019 is less than $500,000

     

    In 2018–19, Kate makes $10,000 in concessional contributions. This leaves an unused amount of the concessional contribution cap of $15,000, which Kate can carry forward for up to five years to increase her concessional contribution cap.

    In 2019–20, in addition to her normal $25,000 concessional cap, Kate can use the $15,000 of unused cap from the previous year. Kate’s total concessional cap for 2019–20 is $40,000.

    See also:

    Last modified: 22 Mar 2017QC 51333