The annual CC cap in both 2022/23 and 2023/24 is $27,500. However, individuals may have a higher CC cap if they are eligible to access any unused CC cap amounts accrued and carried forward since 1 July 2018. Provided they had a TSB of less than $500,000 as at 30 June 2022, they may be able to make up to $130,000 of CCs in 2022/23.
For retirees who have not made any contributions since 1 July 2018, if they are eligible to access their unused CC cap, 2022/23 may present an opportunity to make a maximum personal deductible contribution of $157,500.
Note: Unused CCs are available on a rolling basis and can only be carried forward for a maximum of 5 years. Any unused cap from 2018/19 will expire at the end of 2023/24.
Below are some examples that may still benefit you from making CCs before 30 June 2023.
Example: 12-month exemption
Philip is 68 and had a TSB of $250,000 on 30 June 2022. His last day at work is 15 June 2023. His SG contributions are $12,500 so his available annual CC cap is $15,000. As his TSB was less than $500,000 at 30 June 2022, he can also access unused CC cap amounts that he has accrued since 1 July 2018 to the value of $52,500.
There are no limitations to Philip making a personal deductible contribution of $67,500 before 30 June 2023 – maximising the $80,000 of available CC cap in 2022/23.
If Philip were to limit the contribution made in 2022/23 to an amount that retained his TSB below $300,000 on 30 June 2023, he could also access another year’s CC cap.
That is, under the work test exemption, despite being over the age of 67 on 1 July 2023 and retired, if his TSB is less than $300,000 on 30 June 2023, he will be able to make personal deductible contributions in 2023/24.
Therefore, provided any tax deduction claimed does not create a tax loss, Philip will be able to access any unused CC cap amounts, plus make an additional CC of $27,500 in 2023/24.
Example: Not working and turning 67 in June
Alex is turning 67 in June 2023. He retired at the age of 65 and has no intention of returning to work. Alex wants to make a CC up to his annual cap of $27,500. He also has carried forward unused CC cap amounts of $32,500.
Even though he is not working, Alex can make a personal deductible contribution of $60,000 before his 67th birthday.
Alex can also make an additional concessional contribution of $27,500 in June 2023 before his 67th birthday, to an unallocated contribution holding account. Alex will be entitled to claim a deduction for this additional $27,500 contribution in his 2022/23 tax return.
The fund will be required to pay tax on this additional $27,500 contribution in 2022/23.
The trustee will have to allocate the $27,500 contribution to Alex by 28 July 2023 and the contribution will count against his CC cap in 2023/24. Alex would otherwise not have access to his annual CC cap in 2023/24 as he will be over 67 on 1 July 2023 and will not be able to satisfy the work test.
The contribution caps do not differentiate between a resident and non-resident member.
Provided a non-resident member has a TSB of less than $500,000 on 30 June 2022, they can access any unused CCs from 1 July 2018, despite their residency status. Assuming no prior CCs have been made, in 2022/23 a member can make CCs of up to $130,000.
The eligibility requirements for claiming a tax deduction for personal contributions apply equally to non-residents. Therefore, where a member has sufficient Australian sourced assessable income and a valid Notice of Intent form is executed, they can claim a tax deduction to the extent it does not create a loss.
Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions. It’s also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status. We recommend that if you are looking for advice on this matter, you should contact us.