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Collectables Capital gains tax does not just apply to “big ticket” items such as real estate, farms and shareholdings. It also applies to a special class of assets known as “personal use assets” and, in particular, those personal use assets known as “collectibles”. “Collectables” are specifically defined under the tax law to mean the following items that are "used or kept mainly for your personal use or enjoyment": artwork, jewellery, an antique, or a coin or medallion; or a rare folio, manuscript or book; or a postage stamp or first day cover. However, for an asset to be a collectable, it must have cost more than $500. Otherwise, collectables acquired for $500 or less are exempt from CGT (but subject to important rules to get around or avoid this threshold test). However, the most important rule about a collectable is that if you make a capital loss on selling or disposing of a collectable, that capital loss can only be offset against capital gains from other collectibles. It cannot be offset against the capital gain from, say, shares or real estate, and nor can it be offset against your other income. Furthermore, that jewellery you inherit from your mother will retain its “character” as a collectable (if it was acquired by her after 20 September 1985). So, this too is something to be aware of.  Personal use assets As for “ personal use assets ” per se (ie assets used for personal use or enjoyment which are not “collectables” – such as furniture, clothing, pianos etc) they are only subject to CGT if they cost more than $10,000. More importantly, however, is that you cannot claim a capital loss made on a personal use asset. But is it a business? Finally, of course, it is often the case that a person who owns such collectibles does so for the purpose of trading in them. In this case, the CGT rules take a backseat to the fact that the profit from such activities is assessable in the same way as ordinary income, as if you were operating a business. So, if you find yourself dealing with such items, it is necessary to get good tax advice on the matter.

From bushfire relief groups, sporting clubs, environmental groups, charity associations and many more, volunteers are an indispensable workforce and support network for many organisations. For most, if not all, having volunteers ready to lend a hand is pivotal in them being able to function or survive. Given that there are many hundreds of volunteers propping up all sorts of good works throughout the nation, and in the spirit of thorough tax planning, an important practical consideration for many may be if payments to volunteers constitute assessable income and whether their expenses are tax deductible. What’s a volunteer? There is no common law definition of “volunteer” for tax purposes, although it typically means someone who enters into any service of their own free will, or who offers to perform a service or undertaking. A genuine volunteer does not work under a contractual obligation for remuneration, and would not be an employee or an independent contractor. Volunteers can be paid in cash, given non-cash benefits or a combination of both – payments include honorariums, reimbursements and allowances. Generally, receipts which are earned, expected, relied upon and have an element of periodicity, recurrence or regularity are treated as assessable income. Conversely, where a person’s activities are a pastime or hobby – rather than income producing – money and other benefits received from those activities are generally not perceived as assessable income. The examples below shed light on whether typical payments such as honorariums, reimbursements and allowances constitute assessable income. Is an honorarium assessable income? An honorarium is either an honorary reward for voluntary services, or a fee for professional services voluntarily rendered, and can be paid in money or property. Example 1 Q . Alex works as a computer programmer at the local city council and volunteers as a referee for the local rugby union. This year he organised an accreditation course for new referees. He applied for a grant, arranged advertising, assembled course materials, and booked venues. Michael is awarded an honorarium of $100 for his efforts. A . No , the honorarium is not assessable income as honorary rewards for voluntary services are not assessable as income and related expenses are not deductible. Example 2 Q . Mindy has an accounting practice and volunteers at the local art gallery. Mindy prepares the gallery’s annual report using her business’s software and equipment. At the gallery’s annual general meeting, Mindy is awarded an honorarium of $800 in appreciation of her services. A . Yes , this honorarium constitutes assessable income because it is a reward for services connected to her income-producing activities. Is a reimbursement assessable income? A reimbursement is precise compensation, in part or full, for an expense already incurred, even if the expense has not yet been paid. A payment is more likely to be a reimbursement where the recipient is required to substantiate expenses and/or refund unspent amounts. Example 3 Q . Matthew is an electrical contractor. He volunteers to mow the yard of a local not-for-profit childcare centre. Matthew purchases a $15 spare part for the centre’s mower. The childcare centre reimburses Matthew for the cost of the spare part. A. No , the $15 reimbursement is not assessable income because Matthew has not made the payment in the course of his enterprise as an electrician. Example 4 Q . Rose has a gardening business. She volunteers to prune the shrubs of a local nursing home and uses materials from her business’s trading stock. A. Yes , any reimbursement she receives for the cost of the materials is assessable income because the supplies were made in the course of her enterprise. Is an allowance assessable income? An allowance is a definite predetermined amount to cover an estimated expense. It is paid even if the recipient does not spend the full amount. Example 5 Q . Andy volunteers as a telephone counsellor for a crisis centre. He is rostered on night shifts during the week and is occasionally called in on weekends. When Andy works weekends, the centre pays him an allowance of $150. The allowance is paid to acknowledge Andy’s extra efforts and to compensate him for additional costs incurred. A: Yes , these payments to Andy are considered assessable income because he received the allowance with no regard to actual expenses and there is no requirement to repay unspent money. Expenses incurred by volunteers On the tax deductibility of volunteer expenses, a volunteer may be entitled to claim expenses incurred in gaining or producing assessable income – except where the expenses are of a capital, private or domestic nature. For instance, expenditure on items such as travel, uniforms or safety equipment could be deductible, but expenses incurred for private and income-producing purposes must be apportioned – with only the income-producing portion of the expense being tax deductible. Example 6 Q . Robert operates a commercial fishing trawler and uses navigational charts in his business. He also volunteers as an unpaid training officer at the volunteer coastguard. Robert purchases two identical sets of navigational charts – one for his business, the other as a training aid in coastguard courses. A. Yes , Robert can claim the part incurred in gaining or producing assessable income – in this case, half the total cost. What about donations? Are these deductible? It is also common for volunteers to donate money, goods and time to not-for-profit organisations. To be tax deductible, a gift must comply with relevant gift conditions, and: be made voluntarily be made to a deductible gift recipient, and be in the form of money ($2 or more) or certain types of property. Donors can claim deductions for most, but not all, gifts they make to registered deductible gift recipients. For instance, a gift of a service, including a volunteer’s time, is not deductible as no money or property is transferred to the deductible gift recipient. However, individuals may be entitled to a tax deduction for contributions made at fundraising events, including dinners and charity auctions. Example 7 Mila buys a clock at a charity auction for $200. This is not a gift even if Mila has paid a lot more than the value of the clock. Payments that are not gifts include those to school building funds as an alternative to an increase in school fees and purchases of raffle or art union tickets, chocolates and pens. Example 8 Clive receives a lapel badge for his donation to a deductible gift recipient. As the lapel badge is not a material benefit or an advantage, the donation is a gift. Consult this office for more information on which volunteer payments are considered assessable income and which expenses are typically tax deductible.

The Federal Budget for 2024-25 was handed down on Tuesday 14 May 2024. It contains a range of proposed measures across the areas of income tax, superannuation, tax administration and related cost of living measures. Some of these may affect you directly or indirectly. We have provided a summary of these measures and what they may mean for you. Please feel free to contact this office if you have any queries about them or how they may impact you in your circumstances. Taxation Measures Instant asset write-off threshold of $20,000 extended The $20,000 instant asset write-off for small businesses with an aggregated annual turnover of less than $10 million has been extended to expenditure incurred up to 30 June 2025. Without this extension, the threshold would have dropped back to $1,000 as from 1 July 2024. This measure now provides certainty to the issue. What this means: Given the extension, there is no longer the same urgency in having depreciating assets used or installed ready for use by 30 June 2024 as items costing less than $20,000 acquired over the following 12 months will still be eligible for an immediate write-off for small businesses using the simplified depreciation rules. However, it might still make sense for unincorporated small businesses to acquire depreciating assets costing less than $20,000 before 1 July 2024 as the Stage 3 tax cuts will make the immediate deduction less valuable in 2024-25 than in 2023- 24 (subject to cashflow considerations). CGT changes for foreign residents Changes will be made to the way foreign residents are subject to CGT in Australia by broadening the types of Australian assets that foreign residents will be taxed on in Australia and in tightening the rules that make a foreign resident liable to CGT in respect of interests in “land rich” companies or trusts. In addition, the measures will require foreign residents disposing of shares and other membership interests exceeding $20m in value to notify the ATO, prior to the transaction being executed. What this means: Whether these changes will apply to investment shares held on the ASX by foreign investors is not clear. In any event, the proposed measures will only apply to sales occurring from 1 July 2025 – which will, depending on the final form of the legislation, give time to consider any necessary strategies. No extensions for training and energy efficiency boosts The additional 20% boosts for expenditure on employee training and energy efficient assets for small businesses with an annual aggregated turnover of less than $50 million are scheduled to expire on 30 June 2024 and these incentives have not been extended in this year’s Budget. What this means: There are only about six weeks left to benefit from these incentives, and it may be worthwhile brining forward expenditure you were otherwise planning to incur later in the year, cashflows permitting. ATO discretion not to offset old tax debts on hold Last year the ATO began to offset some older tax debts that had been put on hold prior to January 2017 against current BAS refunds. While in some cases the revived tax debts were relatively small, the ATO was not always able to explain what the debts represented. The ATO suspended the practice pending clarification of what its powers were not to collect these older amounts. The Government will now give the ATO the explicit power not to offset debts put on hold before 1 January 2017. What this means: If you see any unexplained offsets against a current BAS refund, you should contact us in case we can have the ATO remove the offset. Refund frauds and likely delays in processing BAS refunds The Government has now addressed this issue in the Budget by extending the period within which the ATO has to notify a taxpayer that it intends to retain a BAS refund for further investigation from 14 days to 30 days. The measure takes effect in the first income year commencing after enactment of the relevant law (which could be as soon as next month if the government is quick off the mark with its legislation). What this means: If necessary, you may need to be prepared to engage with the ATO about what is behind your BAS refund – eg, you are an exporter or you have recently purchased a significant item of equipment. Student loans repayments to be reduced The Budget proposes to introduce measures so that indexation of the Higher Education Loan Program (HELP) debt will be limited to the lower of either the Consumer Price Index or the Wage Price Index - with effect retrospectively from 1 June 2023. What this means: The Budget papers also said that this will also apply to “other student loans”. Presumably, this measure will help lower the cost of living burden on younger Australians – “and for this relief, much thanks!” (Shakespeare, Hamlet) Instant asset write-off threshold of $20,000 extended to 30 June 2025 As widely expected, the $20,000 instant asset write- off for small businesses with an aggregated annual turnover of less than $10 million has been extended to expenditure incurred up to 30 June 2025. Without this extension, the threshold would have dropped back to $1,000 as from 1 July 2024. Senate amendments boosting the instant asset write-off regime for 2023-24 to $30,000 for businesses with an annual turnover of less than $50 million are not likely to be accepted by the government in the House of Representatives. It is expected that the measure will eventually be passed in the form originally proposed in last year’s Budget – ie, a $20,000 threshold for entities with an aggregated annual turnover less than $10 million. What this means: Given the extension, there is no longer the same urgency in having depreciating assets used or installed ready for use by 30 June 2024 as items costing less than $20,000 acquired over the following 12 months will still be eligible for an immediate write-off for small businesses using the simplified depreciation rules. However, it might still make sense for unincorporated small businesses to acquire depreciating assets costing less than $20,000 before 1 July 2024 as the Stage 3 tax cuts will make the immediate deduction less valuable in 2024-25 than in 2023-24 (subject to cashflow considerations). No extensions for training and energy efficiency boosts The additional 20% boosts for expenditure on employee training and energy efficient assets for small businesses with an annual aggregated turnover of less than $50 million are scheduled to expire on 30 June 2024 and these incentives have not been extended in this year’s Budget. What this means: There are only about six weeks left to benefit from these incentives, and it may be worthwhile brining forward expenditure you were otherwise planning to incur later in the year, cashflows permitting. ATO discretion not to offset old tax debts on hold Last year the ATO began to offset some older tax debts that had been put on hold prior to January 2017 against current BAS refunds. While in some cases the revived tax debts were relatively small, the ATO was not always able to explain what the debts represented. Following complaints by tax practitioners and others, the ATO suspended the practice pending clarification of what its powers were not to collect these older amounts. The government has now signaled it will give the ATO the explicit power not to offset debts put on hold before 1 January 2017. What this means: If you see any unexplained offsets against a current BAS refund, you should contact us in case we can have the ATO remove the offset. Refund frauds and likely delays in processing BAS refunds The ATO has come under criticism recently in relation to more than a few cases where people have successfully made claims for fraudulent GST refunds, sometimes for over a period of time and for large amounts. In responding to this criticism, the ATO had pointed out that its processes have been more geared to getting refunds out to the vast majority of honest taxpayers promptly and worrying about cases of fraud after the event. Given the scale of the refund frauds detected, however, the ATO has suggested that it may need to consider taking more time to process refunds so that they can prevent fraudulent claims. The government has addressed this issue in the Budget by extending the period within which the ATO has to notify a taxpayer that it intends to retain a BAS refund for further investigation from 14 days to 30 days. The measure takes effect in the first income year commencing after enactment of the relevant law, which could be as soon as next month if the government is quick off the mark with its legislation. What this means: If necessary, you may need to be prepared to engage with the ATO about what is behind your BAS refund – eg, you are an exporter or you have recently purchased a significant item of equipment. Superannuation Measures Super to be paid on paid parental leave Super guarantee contributions will be paid on government-funded paid parental leave (PPL) for parents of babies born or adopted on or after 1 July 2025. Eligible parents will receive an additional 12% SG payment on their PPL payments, as a contribution to their superannuation fund. Payments will be made annually to individuals’ superannuation funds from 1 July 2026. What this means: To get government-funded PPL, you will need to meet certain criteria such as be caring for your newborn or adopted child, meet an income test, work test and other residency rules. Social security, cost of living and other measures Social security deeming rates frozen Social security deeming rates will be frozen at their current levels for a further 12 months until 30 June 2025. The lower deeming rate will remain at 0.25% and the upper deeming rate will remain at 2.25%. Flexibility for carer payment recipients From 20 March 2025, the existing 25 hours per week participation limit for carer payment recipients will be amended to 100 hours over 4 weeks. Also, the participation limit will only apply to employment and will no longer include study, volunteering activities and travel time. Eligibility for higher rate of Jobseeker payment extended Eligibility for the higher rate of Jobseeker payment will be extended to single recipients with a partial capacity to work of zero to 14 hours per week from 20 September 2024. Commonwealth Rent Assistance increase The maximum rates of the Commonwealth Rent Assistance (CRA) will increase by 10% from 20 September 2024 to help address rental affordability challenges for recipients. Lower foreign investment fee for build- to-rent properties Foreign investors will be allowed to purchase established build-to-rent properties with a lower foreign investment fee. The lower foreign investment fee will be conditional on the property continuing to be operated as a build-to-rent development.

Unfortunately our financial institutions have not always acted as ethically as we consumers would like. Whether you’ve received bad advice or paid for advice you didn’t receive at all, our supervisory and regulatory bodies have sought not only to improve the system so it won’t happen again, but also to ensure that if you are on the receiving end of such bad behaviour, you could be entitled to receive financial restitution. If you’ve recently received a compensation payment, you might be wondering whether you need to pay tax on it. The answer is - it depends! It depends on how your investment was held 1 and the type of compensation you received. For example, if you’ve disposed of the investment and previously reported a capital gain in your income tax return, your compensation payment increases the capital gain (you may be able to claim the 50% discount too if you held the investment for more than 12 months). You may need to amend your income tax return to include this additional capital gain. If you haven’t yet disposed of the investment, and you hold it as a capital investment 1 , then the compensation payment reduces its cost for when you do dispose of it in the future (make sure keep details of the compensation payment with your tax records to provide to us later). Where your compensation payment includes an amount that is a refund or reimbursement of adviser fees, and these fees were previously claimed a tax deduction by you, then the amount you received as a refund or reimbursement will generally be taxable to you in the income year you receive it. Similarly, any part of the payment that represents interest should also be included in your tax return in the year you receive it. If you’ve received an amount of compensation and not sure whether it is taxable, or if you need to amend a prior year tax return for a payment you received, please reach out to us. 1 Note the tax treatment described may be different if a compensation payment relates to an investment that is held on trust, as a revenue asset, or received by a business or superannuation fund.

A question that often gets asked when dealing with death benefit nominations is whether a person will qualify under the interdependency or financial dependency definitions. This is an important consideration as meeting the dependency criteria will enable potential beneficiaries to qualify as a dependent and therefore allow them to receive a death benefit. Interdependency relationship Put simply, an interdependency relationship exists between two people if all of the following conditions are met: They have a close personal relationship They live together One or both provides the other financial support One or both provides the other with domestic support and personal care. However, if two people satisfy the close personal relationship requirement but cannot satisfy the other three requirements, they can still satisfy the interdependency relationship if: Either or both of them suffer from a physical, intellectual or psychiatric disability, or They are temporarily living apart (eg, overseas or in jail). There is no easy way in determining whether an interdependent relationship exists, however superannuation law provides the following list of considerations to help superannuation fund trustees determine if an interdependency relationship exists (or existed before one of the parties died): Duration of relationship Whether or not a sexual relationship exists Ownership, use and acquisition of property Degree of mutual commitment to a shared life Care and support of children Reputation and public aspects of the relationship Degree of emotional support Extent to which the relationship is one of mere convenience Any evidence suggesting that the parties intend the relationship to be permanent A statutory declaration signed by one of the persons to the effect that the person is or was in an interdependency relationship with the other person. It is not necessary that each of these factors exists in order for an interdependency relationship to exists. Instead, each factor is to be given the appropriate weighting depending on the circumstances. Financial Dependent If a beneficiary fails to meet the interdependency relationship criteria, they may qualify as a financial dependent. Being financially dependent on the deceased generally means you relied on them for necessary financial support. This also applies to children over 18 years old as they must be financially dependent on the deceased to be considered a financial dependent. That said, the term financial dependent is not expressly defined in superannuation or tax legislation, so it takes on the ordinary meaning of that term. As such, the definition of financial dependent is reliant on case law and comes down to the facts of each case. In most cases, it is not the value of payments received from the member that establishes financial dependency but the degree of dependency on that payment. This includes the extent the person relies on the financial support provided by another person to meet basic living expenses. For example, a grandparent who chooses to pay school fees for their grandchild is unlikely to have their grandchild qualify as a financial dependent. This is mainly due to the fact that the payment is seen to be more discretionary in nature than providing for an essential element of life, such as food or shelter. In summary, superannuation case law provides more flexibility for someone to be partially or wholly dependent, whereas tax dependency takes a stricter approach as a substantial degree of dependency is required. Contact us The conditions for the existence of an interdependency and financial dependency relationship under the law can be complex. If you require further information on this topic, please contact us for a chat. Tip - If you are uncertain whether an interdependency relationship exists (i.e., where adult siblings have been living together, or where an adult child has been living with their parents), you can always request a private ruling from the Australian Taxation Office as the definition for interdependency is the same under both superannuation and tax law.

There are many types of nominations offered by different funds. Knowing which one suits your circumstances is key to ensure your superannuation ends up in the right hands. Types of nominations Individuals can direct or influence their superannuation fund trustee as to how they want their death benefits distributed by completing a death benefit nomination form. Superannuation funds offer a range of death benefit nominations, including: Non-binding death benefit nominations Binding death benefit nominations Non-lapsing binding nominations Reversionary pension nominations, and In the case of an SMSF, executing a trust deed amendment or using one of the above types of nominations. However not all funds will provide all options to their members, and completion of these forms is best done by the member in conjunction with their adviser and an estate planning lawyer in the first instance. Non-binding death benefit nomination The is the most common type of death benefit nomination and is offered by most superannuation funds. A non-binding nomination is an expression of wishes which is not binding on trustees. The trustee of your superannuation fund will look at the nomination you make, but will exercise discretion to determine which of your beneficiaries receives your superannuation and in what proportions. Binding death benefit nomination A binding death benefit nomination is a written direction from a member to their superannuation trustee setting out how they wish some or all of their superannuation death benefits to be distributed. The nomination is generally valid for a maximum of three years and lapses if it is not renewed. If this nomination is valid at the time of your death, the trustee is bound by law to follow it. Non-lapsing binding death benefit nomination This is a written direction by a member to their superannuation trustee establishing how they wish some or all of their superannuation death benefits to be distributed. These nominations generally remain in place forever unless you cancel or replace it with a new nomination. If this nomination is valid at the time of your death, the trustee is bound by law to follow it. Reversionary pension nomination If you are in receipt of an income stream, you can nominate a beneficiary (usually your spouse) to whom the payments automatically revert upon your death. With this type of death benefit nomination, the fund trustee is required to continue paying the superannuation pension to your beneficiary if your benefit nomination is valid. SMSFs and death benefit nominations If you are an SMSF member and want to make a death benefit nomination, it is important to review your fund's trust deed requirements to determine the rules regarding death benefit nominations. Although the High Court recently ruled in the case of Hill v Zuda Pty Ltd [2022] that traditional three-year lapsing death benefit nominations do not apply to SMSFs, many trust deeds expressly include the traditional requirements. If this is the case, they must be complied with, and the nomination will lapse. What if there is no nomination or an invalid nomination? If you have not made a nomination, your superannuation fund will have rules for determining the death benefit recipient(s). In many cases, funds will either exercise discretion and follow the same process as if a member had a non-binding nomination, or pay your benefit to your legal personal representative (LPR). The risk with this option is if you don't have a Will, your benefit may be distributed under the relevant state laws for dealing with intestacy! Similarly, if your nominated beneficiary does not meet the definition of a superannuation law dependent at the time of your death, the nomination will be deemed invalid. Again, it will come down to your fund's rules which may determine that your benefit must be paid to your LPR or alternatively that the trustee exercise their discretion. Check your nomination Remember to regularly review your superannuation death benefit nominations when your circumstances change to ensure it remains up to date and ends up in the hands of the right person(s).

Your superannuation death benefits must be paid to someone when you die. That somebody will usually be your estate or your nominated beneficiary (also known as your dependents). Paying death benefits to your estate Unlike other assets such as shares and property, your superannuation and any insurance benefits you have in superannuation do not form part of your estate. That's because your superannuation is not held by you personally, rather it is held in trust for you by the trustee of your superannuation fund. However, you can direct your superannuation death benefit to your estate by nominating your 'legal personal representative' (LPR), who will usually be the executor of your estate. If you nominate your estate or LPR, you must also specify in your Will who you want to distribute your superannuation money to. This can include eligible beneficiaries as well as anyone else you wish to leave your death benefits to. As such, it's important that the directions stated in your Will are up to date as your LPR pays our your death benefits (as well as your other estate assets) as per your wishes. Paying death benefits to a beneficiary/dependent If you want your superannuation death benefits to be paid to a person, that person must be a 'dependent' for super purposes. The meaning of dependent is important as it determines who can receive a death benefit, whether the death benefit will be taxed and in what form your death benefit can be paid out (i.e. lump sum, income stream, etc.). In particular, superannuation law determines who can receive your super directly from your super fund without having to go through your estate. These people are your superannuation dependents. Tax law on the other hand determines who pays tax on your superannuation death benefit. These people are considered tax dependents. The table below summarises the difference between: a superannuation dependent and tax law dependent, and the types of death benefit that can be paid to each category of dependents. As can be seen, the key differences between the superannuation and tax dependent definitions are: a tax dependent does not include an adult child (whereas a super dependent does), and a tax dependent includes a former spouse (whereas a super dependent does not). Although your financially-independent adult children are your superannuation dependents and can receive a death benefit directly from your superannuation fund, they are not tax dependents. This means they will not receive more favourable tax treatment than a tax dependent would receive unless they qualify under an 'interdependency relationship' or are financially dependent on you. A tax dependent will generally not pay any tax on superannuation death benefits. In contrast, a non-tax dependent is taxed on any taxable components of a superannuation death benefit. This could be up to 15% tax plus Medicare levy on any taxable component and potentially up to 30% plus Medicare levy for any taxable untaxed elements within your fund. Need help? Please contact us if your would like further information about who you can nominate to receive your superannuation death benefits.

Did you know you can reduce your income tax bill by making a large personal tax-deductible contribution from your take-home pay to your super? This strategy may be particularly useful if you will be earning more income this financial year or if you have sold an asset this year and made a large capital gain. What is a personal deductible contribution? A personal deductible contribution is a type of concessional contribution that you make with your own money and claim as a personal tax deduction in your tax return, subject to meeting certain eligibility criteria, Other types of concessional contributions include superannuation guarantee (SG) contributions from your employer and amounts you salary sacrifice to superannuation. The cap on concessional contributions is currently $27,500 per year in 2023/24. However certain individuals may be eligible to use the "catch-up" concessional contribution rules to make a larger contribution. What are catch-up concessional contributions? You can carry forward any unused concessional contribution cap amounts that have accrued since 2018/19 for up to five financial years and use them to make concessional contributions in excess of the annual concessional contribution cap. You can make concessional contribution using the unused carry forward amounts provided your total superannuation balance at the end of the previous financial year (ie. 30 June 2023) is below $500,000. Once you start to use some of your unused cap amounts, the rules operate on a first-in first-out basis. That is, any unused cap amounts are applied to increase your concessional contribution cap in order from the earliest year to the most recent year. So, when you use some of your unused cap from prior years (by making additional superannuation contributions), the unused cap form the earliest of the five-year period is used first. And remember, if you don't use your accrued carry forward amounts after five years, your unused cap amounts will expire. So it's best to use it before you lost it! Carry forward contributions may provide strategic opportunities to make larger personal deductible contributions in financial years where you may have a higher level taxable income, for example, due to assessable capital gains. See the example: Joe earns $90,000 and only receives SG contributions from his employer (ie. 9.5% for 2018/19 - 2020/21, 10% in 2021/22, 10.5% in 2022/23 and 11% in 2023/24). He sold some shares in 2023/24 realising a net (discounted) capital gain of $30,000. After factoring in his SG contributions, Joe's cumulative unused concessional contribution (CC) cap amount in 2023/24 is $103,500. Having an unused concessional contribution cap amount of $103,500 will allow Joe to make a personal deductible contribution of $30,000 to fully offset the amount of the capital gain and still remain well within his concessional contribution cap. As a result, by contributions $30,000 as a personal deductible contribution, Joe will have boosted his superannuation while also saving $5,850 in tax being the difference between the tax payable on the capital gain of $10,350 (ie. $30,000 x 34.5% marginal tax rate) and 15% contributions tax of $4,500 ($30,000 x 15%). It's important to seek advice before you make any superannuation contribution. Getting it wrong could mean a loss of all or part of your deduction and may also cause you to exceed the contribution caps which can lead to paying excess contributions tax.