Carry-forward concessional contributions: how unused cap works

The carry-forward concessional contribution rule lets eligible individuals make larger-than-normal tax-deductible contributions to super by using unused concessional cap amounts from the previous five financial years. It is one of the most under-used contribution strategies in Australia and is particularly powerful for SMSF members with variable income — contractors, business owners, people returning to work, and anyone with a lump-sum tax bill they would prefer to offset with a personal deductible super contribution.

How the rule works

The standard concessional contribution cap is $30,000 for 2024–25 (indexed). If you don't use the full cap in a year, the unused portion is added to a rolling balance that can be used in any of the next 5 financial years. Unused amounts expire after 5 years on a first-in, first-out basis.

The $500,000 Total Super Balance test

To use any carry-forward amount, your Total Super Balance (TSB) at the previous 30 June must be less than $500,000. The test is binary — at $499,999 you can use the full available carry-forward amount, at $500,001 you can use none of it. This makes the TSB measurement at 30 June extremely important for anyone close to the limit.

Worked example

Maria is a 47-year-old IT contractor with a 30 June 2025 TSB of $310,000. She contributed $10,000, $0, $15,000, $0 and $20,000 over the previous five years against caps of $27,500/$27,500/$27,500/$27,500/$30,000. Her unused carry-forward balance is $95,000. In 2025–26 she can claim a personal deductible contribution of $30,000 (current cap) plus up to $95,000 (carry-forward) — $125,000 total — provided she has assessable income to absorb the deduction.

Why it matters at tax time

Because contributions are taxed in the fund at 15% rather than at marginal rates of up to 47% (including Medicare), a member on the top marginal rate effectively shifts the deduction to a 32% tax saving. For a one-off capital gains tax event, an inheritance windfall, or a strong contracting year, carry-forward contributions can save tens of thousands of dollars in personal tax while building retirement savings.

Practical traps

• You must lodge a valid Notice of Intent to claim a deduction (NAT 71121) with the fund before lodging your personal return, and receive the fund's acknowledgement back.
• The TSB test is at 30 June of the prior year — your current balance is irrelevant for eligibility, only for the cap impact.
• Carry-forward amounts started accruing from 1 July 2018. There is no carry-forward of pre-2018 unused cap.
• If you exceed the combined cap, excess concessional contributions are added to your assessable income and an interest charge applies.

Sources: Australian Taxation Office — Carry-forward unused concessional contributions (ato.gov.au); Income Tax Assessment Act 1997 section 291-20; ATO contribution cap indexation factors.