Last chance for $25,000 super deduction

For those with a super balance under $500,000, the 2024 financial year is the final year unused concessional contributions from the 2019 financial year can be applied.



The concessional contribution limit was $25,000 for the 2018/19 year. If a portion of this limit wasn't used between 1 July 2018 and 30 June 2019, it could be carried forward for a period of 5 years where a super balance was under $500,000. Any contributions leftover from the 2019 financial year must now be used by 30 June 2024, or they will expire and be lost.

If no contributions were made in the 2018/19 year, this year is the final opportunity to add that extra $25,000 to superannuation and claim a tax deduction. If concessional contributions were not made over the past five financial years, an individual may be able to contribute and claim a deduction for up to $157,500.

Using carried-forward concessional contributions can be highly effective in reducing taxable income, particularly in years where income is higher than usual. This could be due to the sale of an investment property, receipt of a bonus or large capital gain from the sale of shares.

Taking this opportunity to catch up on unused contributions can be a worthwhile boost to a super balance.

Take the example of Matt – a professional earning a salary of $190,000 with unused carried forward contributions from the 2018/19 year of $10,000. Matt could make an extra contribution of $16,600 in the 2024 financial year, being the carried forward $10,000 plus the remainder of his current year limit after a super guarantee of $6,600. This contribution would lead to a tax saving of approximately $4,700 (after factoring in the 15% contributions tax), which is a return of 28% on his $16,600 investment.

Maximising deductible contributions in the wealth-building years is crucial to building a strong superannuation balance by retirement and can be tax-effective. When retirement is 15 to 20 years away, it can be hard to see the benefit of locking away savings in superannuation. The benefits of a solid tax deduction and longer-term planning can outweigh these concerns where cash flow allows.

A disciplined contribution strategy should be a key part of the overall wealth plan during the high-income earning years. A high income doesn’t necessarily equate to wealth – rather the ability to save and do something meaningful with those savings to determine wealth.

Superannuation is the most tax-effective place for wealth to be invested in retirement, as earnings are tax-free once a pension is established. Individuals can now have up to $1.9 million in a tax-free pension account (up from the previous limit of $1.7 million). A pension balance of $1.9 million equates to a tax-free income in retirement of $95,000 per year, based on a 5% drawing rate from age 65.

A consistent and tax-effective approach to building one’s super balance will ensure wealth can be built throughout career years in the concessionally-taxed super environment with that wealth being well structured in retirement years.

Tips to make the most of concessional contributions:

  • Check contributions history with your accountant or by checking myGov.
  • Catch up on unused contributions before your super balance exceeds $500,000.
  • Remember to lodge a notice of intent to claim a deduction notice with the super fund.
  • Consider Division 293 tax if personal income is expected to exceed $250,000.
  • Seek advice, as contribution rules are complex.




Lindzi Caputo
24 August 2023



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