In this guide
When experts talk about super, they frequently warn about the importance of not going over your annual contributions caps, but you don’t often hear what happens if you do.
The first thing to remember is not to panic.
To help you understand what to expect if you do exceed your contribution cap, SuperGuide has put together a simple explainer.
What are the super contributions caps?
Given the generous tax benefits available for holding your retirement savings in the super system, the government has put in place annual caps or limits on the amount of both concessional (before-tax) and non-concessional (after-tax) contributions that can be made into your super account.
Contribution type
Annual cap or limit
Concessional (before-tax) contributions
- $30,000 regardless of age
- If you have a Total Super Balance of less than $500,000 on 30 June of the previous financial year, you can utilise any unused amount of your cap for up to five years to make a carry-forward contribution. You will not exceed the cap unless you use up both the current year’s cap and all the unused cap space that is available from prior years.
Note: From 1 July 2021 to 30 June 2023, the annual concessional contributions cap was $27,500.
Non-concessional (after-tax) contributions
- $120,000 for the annual general non-concessional contributions cap
- Up to $360,000 over a three-year period if you are aged under 75 and are eligible to use a bring-forward arrangement
- Nil if your Total Super Balance was equal to or greater than the transfer balance cap for the financial year you are contributing on the prior 30 June. In 2024–25 the transfer balance cap is $1.9 million.
Note: From 1 July 2021 to 30 June 2023, the transfer balance cap was $1.7 million.
If your contributions amounts go over these caps, you have to pay extra tax. The additional tax is generally designed to put you in the same position you would have been if you had not contributed the excessive amount to super, by paying total tax of your usual marginal rate on excess concessional contributions and on the earnings of excess non-concessional contributions.
Need to know: Your contributions cap applies to the contribution totals for all your super accounts across different super funds.
Exceeding your concessional (before-tax) contributions cap
It’s important to monitor your annual concessional contributions, which include:
- Superannuation Guarantee (SG) contributions
- Award contributions
- Additional employer contributions
- Salary-sacrifice payments
- Personal contributions for which you claim a tax deduction
Good to know
Keeping track of the amount of contributions and when they were received by your super fund is essential, as it will help you avoid going over your contributions cap and potentially paying extra tax.
It’s up to you – not your super fund or the ATO – to keep track of all the contributions made by both you and your employer into your super account.
Case study
Alex receives his salary payments every fortnight, but his employer is not required to make SG contributions for the April to June quarter (ending 30 June) into his super account until 28 July, which is in the following financial year. This is also the case with salary-sacrifice payments if the timing of the payments is not specified in your salary-sacrifice agreement.
Alex salary sacrifices $150 each fortnight into his super account. His employer puts aside this money (plus the relevant SG payment) and submits the contributions for the quarter to the super fund on 10 July.
Although the SG and salary-sacrifice amounts relate to Alex’s pay for the period 1 April to 30 June, these contributions are counted towards Alex’s concessional (before-tax) contributions cap for the following financial year. If Alex is unaware of this, and makes additional concessional contributions the following year, he may inadvertently exceed the concessional contributions cap.
I’ve exceeded my concessional cap: What happens now?
If you go over your concessional contributions cap, the excess amount you contributed is included in the amount of assessable income in your tax return and you pay tax on it at your marginal tax rate. You receive a 15% tax offset to recognise you have already paid 15% tax to contribute the amount to super.
