SMSF trustees looking to use carry-forward concessional contributions should not consider their access to the measure has closed off permanently if their balance exceeds $500,000 in one year, but falls below that mark in the following year, according to a technical expert.
BT technical services technical consultant Tim Howard said the carry-forward concessional cap measure, which has been in operation since mid-2018, was based around a super fund member having a balance below $500,000, but was not stopped once the balance passed that mark.
“A great thing about this measure is while you can only use it when a client has less than $500,000 in super at the previous 30 June, if the client is around that balance and in one financial year they have $510,000 and then $480,000, the unused cap space still accrues in the background,” Howard said during a recent technical briefing.
“The only thing that changes each year is the ability to use it as determined by the previous 30 June balance.”
He said super fund members also did not have to track their unused cap space, nor their ability to use the carry-forward concessional cap space, as it is calculated automatically by the ATO.
“There is no need to lodge a notice of intent to use it like we do with a contribution for a personal deduction or to lodge a notice of intent to claim a deduction,” he said, adding fund members also did not have to notify the fund trustee when the measure was being used.
“All this is sorted out by the ATO and at the back end, but for advisers it’s worth knowing what cap space a client has available if you are advising them in this area, but there is no need to worry about applying for it or about deadlines or whether the right forms have been lodged at a certain point in time.”
He said the carry-forward concessional caps were also useful for people who have just immigrated to Australia and do not have any superannuation and so have a total super balance that is less than $500,000.
“They would still accrue unused cap space and could, if they’ve got the income, make a large concessional contribution claim deduction from that when they move in,” he said.