Many of my blogs are about non- technical topics such as “preparing a business for sale” or for example, “how to grow the revenue of a business”.
However, this blog is about new legislation relating to superannuation. It is an important change.
Concessional contributions to superannuation are tax deductible contributions such as Employer Super Guarantee contributions, Salary Sacrifice contributions or contributions you make personally and claim a tax deduction for.
The current maximum individual’s concessional contribution cap is $25000. That is the total of tax deductible contributions that can be made to a person’s superannuation for the year.
Currently, if a person contributes less than the maximum concessional contribution cap in a year the shortfall is not carried forward in a later year. For example, if an individual contributes $10,000 this year, the unused concessional contribution cap of $15000 can never be used in the future.
However, from 1 July 2018, if you have a total superannuation balance of less than $500,000, you will be able to “carry forward” any unused amount of your concessional contributions limit or cap.
The unused concessional contribution cap can be accessed on a rolling basis for five years. Amounts carried forward that have not been used after five years will expire.
This could be useful for building a person’s superannuation account when cash becomes available in a later year, but not available in the earlier year of the 5 year period.
To simplify the record keeping employers should consider bringing forward June quarter 2018 superannuation payments one month early. This will square things off for the commencement of the new system.
Please call us if you want to discuss this issue or anything else.