If you earn a strong income but haven’t been making extra contributions to super, there’s a little-known strategy that could help you catch up—and save big on tax.

Let’s take a look at how one of our clients, a successful business owner from Bayside Melbourne, used the carry forward concessional contributions provision to reduce their taxable income and boost their retirement savings.

The Background

John*, aged 55, spent several years working as a self-employed builder. The past three years, he hasn’t made any contributions to superannuation. Fast forward to today, and he’s now employed as the general manager of a large building business, earning $200,000 per year.

With his income now placing him in the top marginal tax bracket, he wanted to explore ways to reduce his tax bill while preparing for retirement. That’s where the carry forward rule came in.

What is the ‘Carry Forward’ rule?

Introduced in 2018, the carry forward contributions rule allows individuals with a total super balance under $500,000 to use unused portions of their concessional contributions cap from the previous five years.

In simple terms: if you didn’t use your full allowable cap in past years, you can “catch up” by contributing more than the standard annual limit—without paying excess contributions tax.

How it worked for John

Because John hadn’t made any concessional contributions in the past three financial years, he had a significant amount of unused cap available:

• 2020/21 FY: Fully exhausted cap

• 2021/22 FY: Fully exhausted cap

• 2022/23 FY: $27,500 unused

• 2023/24 FY: $27,500 unused

• 2024/25 FY: $30,000 unused

• 2025/26 FY: $24,000 Employer Contributions (Expected)

That’s a total of $85,000 in unused cap. He will also have access to any cap space remaining this financial year after his employer contributions. To keep it simple, we have assumed he can contribute the full remaining $6,000 this financial year meaning he has access to $91,000.

Tax Savings

Here’s where the strategy really shines. By making a $91,000 personal concessional contribution into superannuation and claiming it as a tax deduction, John achieves:

• Reduced taxable income from $200,000 to $109,000

• Estimated savings of $32,649 in personal income tax

• Pays $13,650 in tax on contributions within superannuation (15% of $91,000)

Based on the above assumptions, John achieves a net tax benefit of $18,999. Even if Division 293 tax applies (an additional 15% for high-income earners over $250,000), the strategy still delivers a significant net benefit thanks to the lower tax rate inside superannuation.

Eligibility

To use the carry forward rule, you must:

• Have a total super balance under $500,000 at the start of the relevant financial year

• Be eligible to contribute to superannuation (generally up to age 75)

• Make a contribution before the end of the financial year

• Lodge a Notice of Intent to Claim a Deduction with your super fund

Could this benefit you?

If you've had years of inconsistent income, run your own business without regular super contributions, or you're now earning a strong salary and wondering how to reduce your tax bill—this strategy could be perfect for you.  

For those approaching retirement, it’s also a smart way to accelerate the growth of your super balance while taking advantage of generous tax concessions. The carry forward rule is a powerful opportunity to catch up, get ahead, and make your money work harder for you.

We are here to help

Vista Financial Group specialises in helping clients make the most of their superannuation opportunities. Whether you’re catching up on contributions, dealing with a significant Capital Gain being realised or planning for retirement, we’ll help you structure your strategy for maximum impact.  

Depending on your individual circumstances, we can also provide strategies that assist with meeting the $500,000 requirement; where strategy and rules permit.

Contact Vista Financial Group today for personalised advice and smart strategies tailored to your financial goals.

Book a call with Aimee Taylor here