Mr Diamantes has over 19 years of experience in financial services and product and joins Padua from Colonial First State where was senior manager, IT regulatory obligations. Prior to this he was general manager – policy & regulation at Australian Retail Credit Association in 2023, and also held senior roles at AMP, Asteron Life, Zurich, and the Financial Planning Association.  Mr Diamantes started his career as technical services manager at Advance Asset Management in 2006.

He holds a Bachelor of Financial Administration from University of New England and is a certified financial planner (CPA). Mr Diamantes also has a Master of Laws from The Australian National University.

Mr Haddad says the appointment is a key move supporting Padua’s ongoing growth, and consolidates its position in the financial advice market.

“Dimitri’s strong technical background and regulatory expertise make him ideally positioned to lead the integration of our software,  and technical solutions. We look forward to Dimitri playing a key role in strengthening our offering to advisers and licensees as we continue to grow and evolve in a rapidly changing industry,” Mr Haddad says.

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Rudy Haddad

Being able to carry forward unused annual Concessional Contributions (CCs) cap amounts since 2018-19 provides some much-welcomed planning opportunities, especially in this environment where the annual CC cap is historically very low.

For context, in 2007-08 the annual cap stood at $50,000 for those under age 50 ($72,500 indexed in today’s dollars) and $100,000 ($145,000 indexed in today’s dollars) for those aged 50 or more.

In this article, we define CCs, outline some of the associated tips and traps, explain how the carry-forward provisions work and combine these learnings into four case studies.

Types of concessional contributions

The most common examples of concessional superannuation contributions are:

• compulsory employer
• salary sacrifice
• personal deductible, and
• voluntary employer. 

Age cut-off

With the exception of compulsory employer superannuation contributions, CCs must be made no later than 28 days after the end of the month in which a person celebrates their 75^th birthday.

Work test requirements – personal deductible contributions only

For personal superannuation contributions looking to be claimed as a tax deduction, the following work requirements apply:

To ensure compliance with work test obligations, the Australian Taxation Office (ATO) will cross-check this information with an individual’s personal income tax return data.

Tax notice obligations and timing

Before being able to claim a tax deduction in their personal income tax return, a superannuation fund member must submit a tax notice (sometimes referred to as a section 290-170 notice) to the fund that received the contribution and wait for the fund’s trustee to formally acknowledge the request.

Importantly, the tax notice should be submitted while the superannuation fund still holds the contributions, otherwise the amount requested will be denied. To avoid disappointment, the tax notice should be submitted to the fund before the earliest of the following events:

• Filing the personal income tax return for the financial year the contribution was made.
• 30 June of the financial year that follows that in which the contribution was made.
• Converting all, or part, of the contribution to an income stream.
• Trustee no longer holds the contributions (for example, benefits were paid as a rollover to another fund, or as a lump sum to the member).

Contribution cap

Annual CC cap

The annual CC cap is periodically indexed in $2,500 increments to increases in Average Weekly Ordinary Times Earnings. For financial years 2017-18 to 2020-21, the annual cap is $25,000. For financial years 2021-22 to 2023-24, the annual cap is $27,500.

Carrying forward unused annual CC cap amount

Since 2018-19, individuals can carry forward unused annual CC cap amounts, for a period of up to five financial years. These unused carried-forward amounts can be utilised in a given financial year provided the individual’s TSB as at 30 June of the previous financial year is below $500,000 (not indexed).

Using the ATO’s online portal (via myGov), clients should provide advisers with information on their TSB and unused carry-forward amounts. This can be found in the portal’s ‘Super’ menu. While this data is highly relevant, advisers and their clients should be on the lookout for transactions that have not yet been reflected in the portal, or transactions that have been captured in error.

Cannot create an income loss – personal deductible contributions only

Despite the available CC cap space, a tax deduction for personal superannuation contributions will be limited so that it can only reduce an individual’s taxable income to nil. That is, it cannot create an income loss. 

Carry-forward case studies

Case study 1 – John, recent retiree, super fund balance is $520,000

John is 68 years old and has just sold two investment properties, resulting in assessable capital gains of $200,000. As such, he is looking to make personal deductible superannuation contributions in the current 2022-23 financial year. His TSB as at 30 June 2022 is $490,000 and his current super balance is $520,000. John has not utilised any of his annual CC caps in the previous eight financial years.

As John has already celebrated his 67^th birthday, any personal deductible contributions he now wishes to make must meet the work test. Note, the work test exemption for low balance recent retirees does not apply to John as his TSB as at 30 June 2022 exceeds $300,000. John must therefore satisfy the work test in 2022-23.

Given John’s TSB as at 30 June 2022 is less than $500,000, he will be able to make a tax-deductible contribution of up to $130,000. That is, $27,500 against the current 2022-23 annual cap and $102,500 using unused caps from previous financial years ($25,000 for 2018-19 + $25,000 for 2019-20 + $25,000 for 2020-21 + $27,500 for 2021-22). Now John just has to go back to work for 30 hours!

Case study 2 – Linda, super fund balance historically above $500,000

In this case study, we assume it is the financial year 2023-24 and the annual CC cap is $27,500.

Linda is 50 years old and historically she has had a fluctuating 30 June TSB above $500,000. This is evidenced in the below table. Linda is looking to maximise the personal deductible contributions she can make in the current 2023-24 financial year.

As Linda is below age 67, there is no work test requirement. Fortunately for Linda, the $500,000 threshold for carry-forward contributions only applies to the balance at 30 June in the previous financial year to which the contributions are made (regardless of the balance in other years). This means, as her TSB on 30 June 2023 is less than $500,000, she will be able to make a tax-deductible contribution of up to $72,500. That is, $27,500 against the current 2023-24 annual cap and $45,000 using unused caps from previous financial years ($5,000 for 2018-19 + $10,000 for 2019-20 + $2,500 for 2020-21 + $0 for 2021-22 + $27,500 for 2022-23).

Case study 3 – Linda (continued), makes $31,000 personal deductible contribution

Linda decides not to claim the maximum deduction of $72,500 and instead claims $31,000. Importantly, this means she has utilised the full 2023-24 annual cap of $27,500 and $3,500 from previous financial years ($3,500 for 2018-19). Note, the current financial year’s cap must be utilised first and then the previous unused financial year caps (in order from earliest previous financial year to most recent previous financial year). Understanding this helps to determine what amounts are carried-forward for potential future use.

The above revisions in the unused cap space means that in 2024-25, Linda could potentially utilise up to $40,000 in unused previous year cap amounts – this of course requires the 30 June 2024 TSB to be less than $500,000. Note, the residual $1,500 for the 2018-19 would not be carried forward as this would exceed the five-year limit on carried-forward amounts – thereby resulting in a ‘use it or lose it’ outcome, where the $1,500 unused amount is lost.

Case study 4 – Andrea, self-managed superannuation fund, ‘contributions reserving’ strategy

Andrea is a 47 year old member of a self-managed superannuation fund (SMSF). The fund’s trust deed allows contributions to be allocated to a member’s account up to 28 days of the month following that in which the contribution was made (this is the maximum period permitted by law). The SMSF adopts a contributions reserve to facilitate this delayed allocation. Andrea’s historical unused annual CC caps and 30 June TSB amounts are as follows.

Andrea is looking to maximise the personal deductible contributions she can make in 2022-23. As the annual CC cap for 2023-24 (next financial year) is $27,500, Andrea can claim up to $107,500 as a personal tax deduction in 2022-23. Here’s how:

• Andrea makes personal contributions to the SMSF of at least $107,500 in 2022-23. As she is under age 67, there is no work test requirement.
• $27,500 of these personal contributions must be made in June 2023 – trustee defers allocating this $27,500 to Andrea’s member account until July 2023, where they then allocate the contribution no later than 28 July.
• SMSF’s trustee receives and acknowledges Andrea’s request to claim $107,500 as a tax deduction for 2022-23.
• Andrea claims $107,500 as a tax deduction in her 2022-23 personal income tax return. This utilises her full 2022-23 annual cap of $27,500 and $52,500 from previous years ($0 for 2018-19 + $0 for 2019-20 + $25,000 for 2020-21 + $27,500 for 2021-22). It also fully utilises $27,500 of next financial year’s 2023-24 annual cap – this is because the fund’s trustee reports $27,500 of the CCs to ATO as having been allocated in July 2023, meaning it counts towards Andrea’s 2023-24 annual CC cap.

Andrea and the fund’s trustee will need to be careful to ensure the ATO’s position on this contributions reserving strategy hasn’t shifted. As such professional tax advice is warranted before this strategy is being deployed.

By Rudy Haddad, head of technical advice

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Michael Lagudi

Padua Solutions has appointed Michael Lagudi to the newly created role of general manager – sales, effective from 22 August 2022. He will be based in Sydney and will work alongside Brett Canning and Joey McCann, reporting to Matthew Esler, co-founder of Padua.

In this role he will be responsible for propelling the sales effort at Padua, as well as developing strategic opportunities across the Australian market.

Lagudi joins Padua from Challenger Limited where he held the position of key account manager.  Prior to that he was the national sales manager at global investment house, Morningstar and business development manager (NSW and WA) for Midwinter Financial Services.

Matthew Esler, co-founder of Padua, said Lagudi’s 11 years’ experience in sales and account management, specifically in the financial services industry will strengthen the sales team and sales strategy at a time of ongoing expansion in the financial advice market.

“Michael’s appointment reflects Padua’s continuing growth and expansion in the financial advice market as we are seeing significant interest in our software, services, research and data.

“He has a wealth of sales experience, and his strong financial background will further support our business development activities.”

Lagudi holds a Bachelor of Commerce with majors in finance and taxation from the University of New South Wales. He has also completed a diploma and advanced diploma in financial planning from Integrity Education Group.

His appointment follows the hire of Rudy Haddad to the newly created role of head of technical advice in June this year, and Kun Singh to the newly created role of head of marketing in April.

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Rudy Haddad

Padua Solutions has appointed Rudy Haddad to the newly created role of head of technical advice, overseeing Padua’s technical capabilities across its software, services, research & data divisions.

Haddad has over 23 years’ experience in financial advice and product and was most recently head of practice management and technical advice delivery at Wealth Market. He has also held senior positions at ING Australia, OnePath and ANZ Wealth, including heading up technical services and intermediated life risk sales strategies.

He holds a diploma of financial planning from Deakin University and a bachelor degree in economics from the American University of Beirut, and is a certified financial planner (CFP).

His appointment follows that of Kun Singh who was appointed to the newly created role of head of marketing at Padua in April.

Singh is responsible for overseeing the development and implementation of Padua’s marketing strategies that showcase the breadth of technology, data and people expertise across the business.

He has over 12 years marketing experience in both Australia and the UK, including with Westpac, Optus, Thomson Reuters and JLL (Jones Lang Lasalle). He holds a bachelor of commerce, marketing and demographics from Macquarie University.

Matthew Esler, co-founder of Padua, said the appointments are a key step in Padua’s ongoing growth and expansion in the financial advice market.

“We are seeing significant interest from financial planning practices and licensees for our Software, Services, Research and Data and these two new appointments are key steps in our long-term growth strategy.

“Padua has expanded rapidly following the initial raise of $10.5m in late 2021 and this has created greater demand for technical advice capability across all divisions. Rudy brings an extraordinary ability to convert regulatory complexity into practical application for advisers – better than anyone I have witnessed in the industry, and it is an absolute pleasure to have him on board.”

Mr Elser added: “It is pleasing to have attracted someone of Kun Singh’s talent and experience. We have already been impressed with his ability across both digital marketing and sales lead generation and we look forward to continuing the transformation of Padua Solutions in the months and years ahead.”

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