Maximise Your Retirement Savings with Carry Forward Concessional Contributions
Carry Forward Concessional Contributions are an essential part of maximising retirement savings, and contributing to superannuation is one of the most effective ways to do so.
The Australian government provides tax incentives for people to save for retirement by allowing them to make concessional contributions to their superannuation funds. Concessional contributions are taxed at a lower rate of 15%, which can result in significant tax savings. One concession that may be of interest to people who have a balance of less than $500,000 in their superannuation fund :
CARRY FORWARD CONCESSIONAL CONTRIBUTION
Making carry forward concessional contributions can provide tax planning opportunities. For example, let’s say you have some extra cash and want to put it into your superannuation fund. If you contribute the money to your super fund, it will be taxed at a lower rate of 15%.
However, if you didn’t make this contribution and kept the money, it would be taxed at your marginal tax rate, which could be as high as 47% depending on your taxable income . Therefore, contributing to your super fund may result in significant tax savings depending on your individual circumstance .
It’s important to note that the 2019 carry forward total (5 year cycle) will expire after 30 June 2023. This means that if you have any unused concessional contributions from the 2019 financial year, you need to use them before the end of the 2022/23 financial year, or they will expire.
To make carry forward concessional contributions, you need to put the cash into your superannuation fund before 30 June and give the fund notice of intent to claim. You can usually do this online.
Key Takeaway:
- Contributing to superannuation is one of the most effective ways to save for retirement in Australia.
- The Australian government provides tax incentives for people to save for retirement by allowing them to make concessional contributions to their superannuation funds.
- Concessional contributions are taxed at a lower rate of 15%, which can result in significant tax savings.
- Carry forward concessional contributions allow individuals to carry forward unused concessional contributions of up to five years before they expire.
- Making carry forward concessional contributions can provide tax planning opportunities and significant tax savings depending on individual circumstances.
- If you have any unused concessional from the 2019 financial year, you need to use them before the end of the 2022/23 financial year, or they will expire.
- To make carry forward concessional contributions, you need to put the cash into your superannuation fund before 30 June and give the fund notice of intent to claim.
In summary, carry forward concessional contributions can provide significant tax savings, and carrying forward unused concessional contributions can provide opportunities for tax planning. However, it’s important to be aware of the eligibility criteria and the expiry dates of unused concessional contributions.
If unsure reach out to your MKG Partners Accountant for initial enquiry on tax consequences of the carry forward concessional contributions. This might also be a chance to consider long term goals, Whether it’s time to review the performance of your super and retirement plans. MKG Wealth Financial Planning can create a step by step plan for your future.
