Reduce Your Tax Bill: How Expats Can Use Super Contributions to Offset Capital Gains
Queenscliff, Victoria, Australia
We've been working with two long-time Australian expats—one based in Asia, the other in the Middle East—who are planning to return to Australia in 2025. Both executives intend to sell their former principal residences (as Australian tax residents) and upgrade to new homes.
Through independent financial advice, they’ve discovered a strategy to reduce (not eliminate) their capital gains tax (CGT) liability: the carry-forward superannuation contribution provisions, also known as the “catch-up” contribution rules.
How Can This Strategy Work for You?
Under these rules, expats can offset (reduce) capital gains from the sale of a property by making a tax-deductible superannuation contribution.
What Are the Carry-Forward Rules?
The current maximum concessional (tax-deductible) superannuation contribution for the 2024-25 financial year (ending June 30, 2025) is $30,000.
The carry-forward rule allows individuals to roll over any unused concessional contribution cap space from the past five financial years into the current year.
This means an individual who hasn’t made concessional contributions in the past five years could contribute unused cap amounts from previous years.
The Australian Tax Office summarises the rule below;
If you have unused concessional cap amounts from previous years, you may be able to carry them forward to increase your contribution caps in later years. You're eligible to do this if you have both:
a total super balance of less than $500,000 at 30 June of the previous financial year
unused concessional contributions cap amounts from up to 5 previous years.
The unused cap amounts you can carry forward depends on the amount you have contributed in previous years, starting from 2018–19. You can carry forward unused cap amounts from up to 5 previous financial years, including when you were not a member of a super fund.
Unused cap amounts are available for 5 years and expire after this. For example, a 2019–20 unused cap amount that is not used by the end of 2024–25 will expire.
The oldest available unused cap amounts are carried forward first. For example, unused cap amounts from 2019–20 would be used to increase your cap first before unused cap amounts from 2020–21.
Unused concessional cap amounts are applied automatically once you exceed the cap in any year”.
For a typical Australian capital city property held for 5-10 years with significant capital gain, this approach won’t neccessarily eliminate CGT entirely, but it provides a valuable tax planning solution to reduce the final liability.
Best wishes
Regards,
Dale Hoy
m) +61 419 364 994
Here are 3 ways I assist Australian expats plan their repatriation.
1 Download my checklist on the 7 key areas for Australian expatriates to start exploring with their advisor.
2 Register for upcoming Round Table- Repatriation Ready: Tax Insights for Australians Returning from Asia" Wednesday 12th March, 2025 at 7-7.45 pm HK/Singapore time/8.00pm Tokyo time.
3 Book a private conversation with me at your convenience.
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