DPM's response to COVID-19 outbreak
As we carry a responsibility to keep our employees safe and minimise the risk of exposure for our clients, note that DPM will be ceasing all face-to-face client meetings. All appointments can be conducted over the phone or via web-conferencing.

Find out more about the Coronavirus stimulus package

Concessional contributions ‘catch-up’ – what it all means?

— 8 min read

Superannuation contributions can be divided into two types:

  • Concessional (before-tax) contributions – including employer Superannuation Guarantee Contributions (9.50% in FY19); and
  • non-concessional (after-tax) contributions

Each type of super contribution is subject to a contributions cap – a limit on the amount of contributions you can make in any one year. The current annual limit on concessional contributions is $25,000 p.a. and non-concessional contributions, $100,000 p.a.

On 1 July 2018, a change to the legislation relating to concessional contributions was introduced. Those who have not maximised concessional contributions in a financial year, will now be able to carry forward their unused concessional super contributions entitlement to use within the next five subsequent years.

Who is eligible?

  • Individuals with a superannuation balance less than $500,000.
  • Individuals aged under 65. Individuals aged 65-74 must meet the work test (40 hours gainful employment over a 30 day period) to be able to access the arrangements.
  • Individuals who did not maximise concessional super contributions ($25,000 p.a.) from FY19. This means that the first year in which an individual will be able to make additional concessional contributions by applying their unused concessional contributions cap amounts is the 2019/20 financial year.

Understanding the opportunity

Those who have been out of the workforce for some time are at a natural disadvantage in terms of retirement savings. This may include those on family/maternity leave, working part-time, undertaking sabbaticals and fellowships. Under the new measure, concessional contribution entitlements that would have previously lapsed can be used once a person’s income situation improves.

In combination with an individual’s ability to claim a tax deduction for personal contributions, the catch-up measure may provide greater capacity and flexibility to contribute and tax-deduct in order to offset taxable capital gains and other forms of taxable income.

A couple of things to keep in mind:
  • The tax deduction is only available to an individual and not to an employer or another party. I.e. it will rule out an employer claiming a deduction for a catch-up contributions in future years for example a doctor employing their spouse.
  • Unused concessional cap amounts not utilised after five years will no longer be able to be carried forward.

Understanding the $500,000 balance threshold

  • It is based on the individuals super balance at 30 June in the previous financial year. For example, if you were making a catch-up contribution in FY 2018/19, your balance as at 30 June 2018 will be used
  • Due to market volatility, an individual’s super balance at 30 June each year may be more/less than $500,000 each year. This could lead to someone missing out on claiming the catch-up contribution in years when the balance counted is more than $500,000 and their personal income has increased over the previous year.

concessional contributions

An example scenario

Jerry, whose super balance is less than $500,000, contributes $5,000 concessional contribution in 2018/19. He therefore has an unused concessional contribution entitlement of $20,000 from the 2018/19 financial year.

Jerry can carry this unused entitlement into 2019/20, enabling him to make $45,000 worth of concessional contributions ($20,000 carried forward from 2018/19 plus $25,000 pertaining to 2019/20).


If you would like to learn more or discuss whether you may be in a position to make additional concessional contributions, book an obligation-free initial consultation with one of our Private Wealth Consultants to discuss your personal situation.

* The information contained in this site is general and is not intended to serve as advice. DPM Financial Services Group recommends you obtain advice concerning specific matters before making a decision.



William Ezzy

B.Comm, MAppFin, CFP®


Connect on LinkedIn

Will joined DPM in 2016. More than 13 years’ experience in the Financial Services industry has allowed him to work closely with a varied client base. Will specialises in developing long term wealth management plans, tailoring ongoing strategies to ensure his clients are in the best financial position to achieve their goals.