Superannuation is a tax-sheltered investment option that allows people to build savings faster. There are tax concessions when they contribute, on the earnings in their account, and when they retire. Super is especially attractive to people in the later stages of their working career.

If a persons’ total super balance was less than $500,000 on the previous June 30 they have a special opportunity to do carry-forward contributions. They can go back up to five years and catch up any tax-deductible contributions they were entitled to put into super but didn’t.

So a person could contribute up to the current limit of $27,500 for this year, plus catch up the amounts they missed since the 2018-19 financial year. Depending on circumstances that could mean a very large deduction, up to $100,000 or even more.

Who needs a tax deduction that big? People who have sold a property for a large capital gain could use such a deduction. The taxable gain on a property held for many years could easily be more than $100,000. This could be offset by a catchup super contribution.

The same applies with shares. For example if someone bought Commonwealth Bank shares for $5.40 when they were issued, or CSL at $2.30 and have sold them for $115 or $280 respectively, they need a large tax deduction to offset the capital gain.

Business owners who have built successful businesses and now have high incomes may also need larger tax deductions. Farmers can use Farm Management Deposits to defer income from good years to bad. They can report their FMD income but claim a super tax deduction to offset it.

A tax rate of 15 per cent applies to deductible contributions, much less than the income tax that can apply.

Taxpayers can look up their past unused contributions for each year on their MyGov account by linking their Tax Office records to it.

When claiming a large tax deduction, the amount is first applied to the current year, up to the $27,500 limit including employer contributions and salary sacrifice if applicable.

The amount over that is then applied to the oldest unused amount, the 2018-19 year currently. Any amount in excess is applied to the next oldest year, the 2019-20 year, and so on. If the unused amount from 2018-19 is not claimed in this financial year it lapses and is lost permanently.

People with lower super balances and higher incomes, especially if closer to retirement, should try not to waste any past financial years’ catchup amounts while their balance is under $500,000. Contribute up to the $27,500 limit for this year, plus the 2018-19 amount. Continue that each year.