2021 may have had a subdued start, but a new year brings in new resolutions, perhaps one of your resolutions this year is to boost your super balance so you can enjoy an early retirement. Even if retirement is not on the horizon for you, it is good practice to take any opportunity to grow your retirement savings. With the unused concessional contributions cap carry forward, you are now able to contribute more to your super than ever before.

In a nutshell, the unused concessional contribution cap carry-forward allows individuals to carry forward any unused amounts from their concessional contributions cap, provided their total super balance is less than $500,000 on 30 June of the previous year. Although the unused concessional contributions cap carry-forward was a measure that applied from 1 July 2018, the first year individuals will be entitled to carry forward unused amounts is the 2019-20 financial year.

This is particularly useful for people who have had to take a break from work or had interrupted work patterns due to the pandemic or other reasons, such as taking parental leave or having a chronic illness. It would also benefit those running small businesses, which typically have uneven income. The carry-forward cap would therefore provide the opportunity for those disadvantaged to “catch-up” if they have the capacity or choose to do so.

Using the carry-forward amounts is easy, you will first need to determine whether you have any carry-forward amounts, which can easily be found through the ATO. If you find that you do have unused concessional contribution cap amounts carried forward and want to make use of it, all you have to do is make concessional contributions that exceed the cap for the year. Currently, the cap is $25,000, so if you make a $30,000 worth of concessional contributions, $5,000 of your unused cap will be applied (provided you have $5,000 of unused cap amount).

To take further advantage of the carry forward unused concessional contributions cap, individuals can combine this with making personal contributions which may generate a larger than normal deduction for a particular income year, which may be helpful to offset events where you receive a large amount of income or capital gains.