Contributing large sums to super
26 May 2022
As you get closer to retirement you may want to contribute a larger sum of money to super, such as a bonus payment from work or an inheritance. Although there are limits on how much you can contribute to super each financial year, it’s possible to contribute more without paying additional tax by using the carry forward rule or bring forward arrangement.
Carry forward rule
The Carry forward rule allows you to contribute to your super account unused concessional contribution amounts from previous years. You would have an unused concessional contribution amount if you contributed less than the concessional contribution cap in a financial year (the current cap is $27,500).
There are a few things to note if you’re considering using the carry forward rule to make extra concessional contributions without paying additional tax:
- To contribute your unused cap amounts you must have a total super balance of less than $500,000 on 30 June of the previous financial year
- You can carry forward and contribute unused cap amounts from the 2018-19 financial year onwards. Unused cap amounts from 2017-18 financial year or prior financial years are not able to be carried forward.
- Unused cap amounts are available for a maximum of five years and after this period will expire. For example, unused cap amounts from the 2018/19 financial year will expire at the end of the 2023/24 financial year.
For more information on the carry forward rule and examples of how you could use it to contribute more to your super visit the ATO.
To work out if you have any unused concessional contributions, log into MemberOnline to view the concessional contributions you’ve made to BUSSQ since 2018-19.
If you have multiple super funds you will also need to check with your other super fund/s because contributions made to all your super funds count towards your contribution caps. You can also log into ATO online services to view your concessional contributions and the carry forward contributions you have available across all funds (noting that this may not be the most up to date information).
Bring forward arrangement
The bring forward arrangement allows you to access your future non-concessional contribution cap amounts.
The current non-concessional contributions cap is $110,000 per year. However, the bring-forward arrangement allows eligible super fund members to make up to $330,000 of non-concessional (after-tax) contributions in a single year without exceeding the cap or paying extra tax.
To be eligible to use the bring forward rule, you must be under the age of 75 and your superannuation account balance must be under the $1.9 million cap.
For example, Dave who is 61 years old and has a $400,000 superannuation balance, inherits $260,000 and he decides to put that money into super rather than the bank. Dave takes advantage of the ‘bring forward’ rule and tops up his super account with the $260,000 in a single year. Because Dave hasn’t gone over the $330,000 he can still make further non-concessional contributions, up to $70,000, into his super over the next two financial years.
For more information on the bring forward arrangement and examples of how you could use it to contribute more to your super visit the ATO.
We’re here to help you
If you would like to find out more about using the carry forward rule or the bring forward arrangement to make additional contributions to your BUSSQ account, our team are available to help you. As a BUSSQ member you also have access to personal financial advice on contributions at no extra cost*. Call us on 1800 692 877.
Sources: ato.gov.au/individuals/super/in-detail/growing-your-super/super-contributions---too-much-can-mean-extra-tax/?anchor=Bringforwardarrangements#Bringforwardarrangements and ato.gov.au/individuals/super/in-detail/growing-your-super/super-contributions---too-much-can-mean-extra-tax/?page=5.
*Personal advice is limited to BUSSQ products and is advice on insurance, investment choice, contributions and retirement. The cost of this advice is included in the BUSSQ administration fees and costs and this advice is provided by Link Advice Pty Ltd (ABN 36 105 811 836 AFSL 258145). This article provides general information only and does not take into account your personal financial situation or needs. Before acting, you should review the Product Disclosure Statement (PDS) to ensure you have all the information about the relevant BUSSQ product and how it works and consider the appropriateness of the information to your needs or obtain financial advice tailored for your personal circumstances. The PDSs and Target Market Determinations for BUSSQ products can be found at bussq.com.au/forms-and-resources. Prepared by BUSS(Queensland) Pty Ltd ABN 15 065 081 281, AFSL 237860, Trustee of Building Unions Superannuation Scheme (Queensland) (BUSSQ) ABN 85 571 332 201.