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Re: Making catch-up concessional contribution (who only started work in FY2020)

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I'm new

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Hi ATO,

 

I have not worked before and had no superannuation as of 30/06/2019.

 

If I started to work in this financial year (FY2019/20) can I rollover my unused concessional contribution cap from last year (FY2018/19) and contribute up to $50,000 before tax?

 

Regards,

 

 

 

 

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ATO Certified

Devotee

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Hi ET3000

 

Yes you could contribute $50,000.

 

The relevant bit of law is the Income Tax Assessment Act 1997, section 291.20.

 

Subsection (6) says:

 

You have unused concessional contributions cap for a * financial year if the amount of your * concessional contributions for the year falls short of your * concessional contributions cap for the year. The amount of the unused concessional contributions cap is the amount of the shortfall.

 

The cap for the year is $25,000, and this isn't linked to whether someone is in the workforce or not.

 

So yes, a few years from now people joining the workforce will be able to make $150,000 of concessional contributions in their first year without exceeding the concessional cap. More of a theoretical than a practical opportunity for most.

 

Seb

I'm an ATO employee voluntarily providing my time here

3 REPLIES 3
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Best answer

ATO Certified

Devotee

Replies 2

Hi ET3000

 

Yes you could contribute $50,000.

 

The relevant bit of law is the Income Tax Assessment Act 1997, section 291.20.

 

Subsection (6) says:

 

You have unused concessional contributions cap for a * financial year if the amount of your * concessional contributions for the year falls short of your * concessional contributions cap for the year. The amount of the unused concessional contributions cap is the amount of the shortfall.

 

The cap for the year is $25,000, and this isn't linked to whether someone is in the workforce or not.

 

So yes, a few years from now people joining the workforce will be able to make $150,000 of concessional contributions in their first year without exceeding the concessional cap. More of a theoretical than a practical opportunity for most.

 

Seb

I'm an ATO employee voluntarily providing my time here

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Initiate

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Seb

Thank you for your advice , it is greatly appreciated

Further to the scenario you pose, if a retiree had not worked for several years received an abnormal taxable income (from say a one off capital gain), could they apply the unused consessional contributions in this one year of capital gain to reduce the taxable income? Just how many years of consessional contributions be applied ? (assuming the retiree meets the contribution rules relating to age and TSB and TBA )

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ATO Certified

Devotee

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Hi Tomo

 

Yes, if the retiree's total super balance is below $500,000 as at 30 June of the previous financial year and meets the conditions to be able to make contributions they'll be able to make use of their unused concessional cap space in that year. If it's from a capital gain it'd be by making a personal contribution and claiming a tax deduction for it.

 

The unused amounts from the five previous years are available, plus the $25,000 cap for the year in which the contribution is made. So if the retiree's been out of the workforce for the past five years there'll be $125,000 of unused space plus $25,000 space available, so $150,000 all up.

 

Seb

 

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