How you can use superannuation carry forward to catch up on your super balance

So there’s been a lot written lately about the gender pay and super gaps that result further down the track. Mostly pay and super gaps affect women due to time out of the workforce having a family or taking on responsibilities for caring for elder family members. However, stay at home dads/carers are becoming more common in society too. 

However, they’re not the only places super gaps can occur. 

Because super works to create wealth on retirement on the basis of time and compound interest, falling behind for any reason on your super contributions, means your projected retirement super balance is likely to fall behind too. And when you consider how many people lost their job or their role was downgraded to part time or on again/off again during Covid, a lot of people’s super would likely have taken quite the hit. 

Fast forward some years to retirement and a lot of people will likely be retiring with less than they thought they would unless they take action to catch up on missed payments now or at least in the coming couple of years. And yes, the clock is in fact ticking on this one. 

Superannuation carry forward

There’s a little known and used strategy available to help anyone who hasn’t managed to put a ‘maximum contribution’ into their super. It’s known as the superannuation carry forward. 

The best thing about using a superannuation carry forward strategy, is that it can be used as a method of topping up (or rather back-filling) your previous five years concessional superannuation contributions. 

So as long as you haven’t reached the superannuation contribution cap, which as of FY21-22 now sits at $27,500 a year (previously $25,000 a year), it’s a chance to invest in your future and pay less tax as a result. Now that’s win-win.

How does superannuation carry forward work?

As at July 1, 2019, the government introduced new rules that allowed eligible taxpayers to claim a tax deduction on the unused portion of the super concessional contribution caps from the previous five years (back dated to July 1, 2018). So in a nutshell, you can ‘top up’ the difference between what you paid into super (as a concessional contribution) and the maximum contribution allowed as long as your superannuation balance at the previous 30 June was less than $500,000.

Before we go too much further, let’s define concessional contributions.  These can come from your employer as part of the 10.5% super guarantee. But they also include pre-tax salary sacrificed contributions you’ve made personally. 

So let’s say, you’ve been on a regular salary of $85,000 and for ease of example, your salary hasn’t changed and you don’t earn overtime, have a side-gig or any other income to declare to the ATO. And your superannuation is paid on top of your salary. 

Tax year



Super $

Super cap

Super gap

FY 2018-19


9.5 8075 25,000 16,925
FY 2019-20


9.5 8075 25,000 16,925
FY 2020-21 85000 9.5 8075 25,000 16,925
FY 2021-22 85000 10 8500 27500 19,000
FY 2022-23 85000 10.5 8925 27500 18,575


So all up, you could make a couple of catch up payments totalling $88,350 in addition to what you’ve already paid (or for 2022-23 are paying/will pay) without triggering a tax penalty. 

Now you might be asking where you’re getting the extra funds to top up your super, especially given the rising cost of living. And this is where it gets a little more interesting and tax effective.

Super carry forward example 1

Let’s just say in the current job seekers market, you change jobs and all of a sudden you’re earning an extra $20K. You’ve mostly been comfortable enough living on your old salary, so decide you’re going to put the extra into your super.  Let’s look at the calculations then. 

Tax year



Super $

Super cap

Super gap

FY 2022-23 105,000 10.5% 11,025  27,500 16,475

 You can still put in an extra $86,250 without tax penalty. 

Let’s assume you’ve minimal other tax deductions you can claim each year. 

The taxable component on $105K is $24,592 (not including medicare levy). However if you put $20K into super, your taxable income is only $85K and the taxable payable on your salary drops to $19,792. You’ve just created a considerable $6,500 tax saving. 

And even though you’re still paying 15% tax on your super contributions, it’s a whole lot better than paying 32.5 cents. Another way to think of it is, for every dollar you put into super, you’re effectively saving 16.5 cents in tax.

Superannuation carry forward example 2

And let’s just say your partner, suddenly gets a massive pay rise and your income becomes secondary to theirs. You can now survive without most of your income. But you like what you do and you’re going to keep working. Besides which, you just got a new job and a good pay rise. You and your partner decide that you’re going to put almost everything into your super to top it up.

You decide that you’re going to put everything that’s taxable above 19% into super (so anything over $45,000) which amounts to $60,000. This means the taxable component of your salary is now only $5,667. You probably also likely qualify for a low income tax offset and your medicare levy is also smaller. AND…you’ve put an extra $60K + $11,025 into super this year. What a great way to catch up on your future wealth balance.

Of course you won’t be able to do the exact same thing next year on your super account. Because you’re effectively all but caught up (there would now only be a gap of $26,250 on the original $86,250 gap in example 1). So you’ll need to work with an accounting professional to ensure you’re not paying over your concessional contributions cap with your superannuation carry forward.

Of course, if you’re looking for assistance to better plan for your retirement or help you manage your superannuation carry forward contribution to ensure you don’t trigger a tax penalty, that’s where we can help. You can call us on 6023 1700 or connect with us via Facebook or LinkedIn.

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If you've got financial or business questions, or you just want to run something by us, we'd be delighted to really talk to you – in person, over the phone - call us on 02 6023 1700 - or you can use the form below and we'll get back to you.

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Lloyd Accounting is a boutique accounting firm based in North Albury that operates with the sole purpose of making your tax and business affairs as easy as possible. For us, it's about really understanding what it is you're wanting to achieve and then using our experience and expertise to help facilitate that.

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