Contribution caps for super
A ‘cap’ refers to the maximum amount you can contribute to your super each financial year. If you contribute above the cap, you may have to pay extra tax.
The cap amount and the extra tax you need to pay depend on whether the contributions are concessional (before tax) or non-concessional (after tax).
Concessional contributions can include:
- compulsory contributions paid by your employer – such as the super guarantee
- salary sacrifice contributions
- administration fees and insurance premiums paid by your employer
- personal contributions for which you have claimed an income tax deduction
- notional taxed contributions if you are a member of a defined benefit fund
- amounts allocated from a fund reserve.
Non-concessional contributions can include:
- personal contributions that your employer makes from your after-tax income
- contributions your spouse makes to your super fund
- personal contributions not claimed as an income tax deduction
- contributions in excess of your concessional contributions cap which have not been withdrawn from the superannuation fund
- contributions in excess of your capital gains tax cap amount; and
- most transfers from foreign super funds.
There are some amounts that do not count as non-concessional contributions due to special rules. These include:
- Government co-contributions
- contributions made from the proceeds of ‘downsizing’ your home (if you meet specific conditions)
- ‘re-contribution’ of amounts that you withdrew from super early under rules that applied because of the COVID-19 pandemic during 2019-20 and 2020-21.
You can find more information about the amounts that are treated as non-concessional contributions - and those that aren’t - on the ATO website.
What are the caps?
There are limits to the amount of money you can put into super each financial year before you pay extra tax. Different caps and rules apply to concessional contributions and non-concessional contributions (see above for an explanation of these).
Note: The contribution cap rules are quite complex. The amount you are able to contribute can change depending on your personal circumstances, including your age and your super balance. If you are planning to make contributions close to the cap amounts, we recommend that you check the ATO website for further information and consider speaking to a financial adviser.
Concessional contribution cap
The concessional contribution cap for 2023-24 is $27,500, regardless of your age.
However, if your total super balance was less than $500,000 as at 30 June and your concessional contributions were less than the cap for the year, you may be able to ‘carry forward’ any unused part of the cap to use for extra contributions within the next five years.
Concessional contributions generally attract a tax of 15 per cent when made to your fund. If you go over your concessional contribution cap for the year, the excess amount will be taxed at your marginal tax rate, plus an additional excess concessional contributions charge.
For more information on the concessional contribution cap, see the ATO website.
Concessional contributions may also be taxed at a higher amount if your ‘income’ plus concessional contributions for the year exceeds $250,000 (for more information about this 'Division 293 tax', see the ATO website).
Non-concessional contribution cap
The non-concessional contribution cap for 2023-24 is generally $110,000, but the cap that applies to you personally may be different. It could be:
- higher, if you use the ‘bring -forward’ arrangements (see below)
- nil, if your total super balance on 30 June 2023 was $1.7 million or more.
If you are under 75 years old, you may be able to make non-concessional contributions of up to three times the annual cap in a single year. If eligible, you automatically gain access to future year caps when your contributions in one year exceed the annual cap. This is known as the ‘bring-forward’ option. The cap amount that you can bring forward, and whether you will have a bring forward period of two or three years, will depend on your total super balance.
For more information on the non-concessional contribution cap, including the bring forward option, see the ATO website.
Contributing in excess of the cap
You can contribute more than the caps, but you should be aware that you may have to pay additional tax on the excess amounts.
If you go over your concessional contribution cap for the year, you may have to pay your marginal tax rate on the excess amount, rather than the 15 per cent concessional rate. An additional excess concessional contributions charge will also apply – this is a notional interest charge to reflect the fact the tax is being paid later than the tax on your other income for the year. If you have excess concessional contributions, you may choose to withdraw up to 85 per cent of your excess concessional contributions from your super fund to help you pay the extra tax liability.
If you go over your non-concessional contribution cap for the year, you may be able to withdraw the excess amount and 85 per cent of any earnings on that amount. The earnings amount will be included in your income tax assessment and taxed at your marginal rate (the excess contribution amount will not be subject to tax). However, if you choose to leave your excess contributions in your fund rather than withdraw them, you will pay tax 47 per cent on the excess amount.
Given the potential tax implications, you should seek advice from a qualified financial adviser before exceeding either your concessional or non-concessional contribution cap.
Tips to avoid going over the caps
- If you claim a tax deduction for your personal contributions, remember this means they will count against your concessional contributions cap, not your non-concessional contributions cap.
- Contributions count in the year they are received by the fund, not in the period in which they accrued. Therefore, you should ask your employer when the last contribution to your fund for the financial year will be so that you have all the right information.
- Don’t leave it until the last minute of a financial year to make contributions. Allow sufficient time for payments to be processed by your fund. You should check when your contribution is likely to be received by your fund. If using a third party, such as a financial planner to make the contributions, they need to ensure the contribution arrives at the fund before the end of the year.
- If in doubt, you should check with your fund about when your contributions have been received.
- You may also like to speak to your super fund about whether you should adjust your intended contributions in the next year to avoid making excess contributions.
For more information about contributing to super visit www.ato.gov.au/supercaps.