Private ruling: Unused concessional contributions cap - 5 year carry forward
Date of advice: 22 November 2023
Published: 8 January 2024
Date scheme commenced: 1 July 2018

Ruling: Q1: Under section 291-20 of the Income Tax Assessment Act 1997 (ITAA 1997), is the Taxpayer, able to increase his concessional contribution cap in the 2023-24 financial year, by applying previously unused concessional contributions cap amounts accrued from the 2018-19 to 2022-23 financial years inclusive? | A1: Yes.

Relevant facts and circumstances: The Taxpayer turned 56 in the 2023-24 financial year. From 2017 to 2022 the Taxpayer was an Australian resident, being the holder of a Partner Visa Subclass 100. In 2021, the Taxpayer commenced employment in Australia in a government position. The Taxpayer became an Australian resident for tax purposes in the 2021-22 financial year. The Taxpayer's total super balance (TSB) was less than $XXX as at 30 June 2023. No superannuation contributions (concessional or non-concessional) were reported for the financial years prior to the 2021-22 financial year. The Taxpayer's concessional contributions in the 2021-22 and 2022-23 financial years, were a mixture of superannuation guarantee contributions and personal contributions for which a deduction was claimed.


Reasons for decision: Detailed Reasoning - Issue 1: Unused concessional contributions cap - 5 year carry forward | Detailed Reasoning - Question: Under section 291-20 of the ITAA 1997, is the Taxpayer, able to increase his concessional contribution cap in the 2023-24 financial year, by applying previously unused concessional contributions cap amounts accrued from the 2018-19 to 2022-23 financial years inclusive? | Summary: Under section 291-20 of the ITAA 1997, the Taxpayer is able to increase his concessional contribution cap in the 2023-24 financial year, by making excess concessional contributions in that year and applying previously unused concessional contributions cap amounts accrued from the 2018-19 to 2022-23 financial years inclusive. | Detailed Reasoning - Detailed reasoning: The concessional contributions cap amounts are: $25,000 for the 2018-19 to 2020-21 financial years inclusive; and $27,500 for the 2021-22 to 2023-24 financial years inclusive. The 'unused concessional contributions cap' and the 'total superannuation balance' are defined in the ITAA 1997 as follows: | Detailed Reasoning - Section 291-20 Your excess concessional contributions for a financial year: ... | Detailed Reasoning - 291-20(3): However, your concessional contributions cap for the *financial year is increased in accordance with subsection (4) if: (a) your *concessional contributions for the year would otherwise exceed your concessional contributions cap for the year; and (b) your *total superannuation balance just before the start of the financial year is less than $500,000; and (c) you have previously unapplied *unused concessional contributions cap for one or more of the previous 5 financial years. | Detailed Reasoning - 291-20(4): Apply your unapplied *unused concessional contributions cap for each of the previous 5 *financial years to increase your *concessional contributions cap (but not by more than the excess from paragraph (3)(a)). | Detailed Reasoning - 291-20(5): For the purposes of increasing your *concessional contributions cap under subsection (4), apply amounts of *unused concessional contributions cap for previous *financial years in order from the earliest year to the most recent year. | Detailed Reasoning - 291-20(6): You have unused concessional contributions cap for a *financial year if the amount of your *concessional contributions for the year falls short of your *concessional contributions cap for the year. The amount of the unused concessional contributions cap is the amount of the shortfall. | Detailed Reasoning - 291-20(7): However, you do not have unused concessional contributions cap for a *financial year earlier than the 2018-2019 financial year. | Detailed Reasoning - Section307-230 Total Superannuation balance: Your total superannuation balance , at a particular time, is the sum of the following: (a) if you have one or more *superannuation interests that are not in the *retirement phase - the *accumulation phase values, at that time, of each such interest; (b) if you have a *transfer balance account - the *transfer balance of the account at that time (but not less than nil); (c) the amount of each *roll-over superannuation benefit: ... | Detailed Reasoning - Application to your circumstances: (Legislative references are to the ITAA 1997) The Taxpayer did not meet or exceed his concessional contributions cap (CCC) for any of the years from 2018-19 to 2022-23 inclusive. As such, he has unused CCC for those 5 financial years. The Taxpayer intends to make excess concessional contributions in the 2023-24 financial year. The Taxpayer's TSB was under $XXX as at 30 June 2023. Accordingly, the Taxpayer meets the 3 conditions under subsection 291-20(3) and is able to increase his CCC for the 2023-24 financial year. Under 291-20(4), the amount by which the Taxpayer can increase his CCC will be limited to his unapplied unused CCC for each of the previous 5 financial years being: $25,000 for the 2018-19 to 2020-21 years inclusive; $608.66 for 2021-22 year; and $2,240.88 for 2022-23 year. These amounts aggregate to $77,849.54 of unapplied unused CCC which may be utilised in the 2023-24 financial year. In increasing his CCC for the 2023-24 financial year, the Taxpayer will need to apply amounts of unused CCC for previous financial years in order from the earliest year, which in this case is 2018-19, to the most recent year in accordance with 291-20(5).

This advice applies for the following : Year ended 30 June 2019 to year ending 30 June 2024 | Relevant legislative provision: Income Tax Assessment Act 1997 section 291-20