What are contribution caps?
Contribution caps are limits the Australian Government puts on amounts you can contribute to your super without paying extra tax. There are different caps for your concessional (before tax) and non-concessional (after tax) contributions.
All contributions you make to any super fund during the financial year count towards your caps. Log in to Member Online at brightersuper.com.au to monitor your contributions. Keep in mind, your employer generally does not pay contributions to Brighter Super the same day you receive your pay.
Concessional contributions cap
A concessional contribution is one made to your super account from before-tax money and includes employer contributions, salary sacrificed contributions and any contributions you claim as a tax deduction. Everyone has a concessional contributions cap of $27,500, for the 2023/24 financial year. This was increased from $25,000 in the 2020/21 financial year. All concessional contributions are taxed at 15% when they are paid into your super account.
| Concessional contributions include… |
Cap from 1 July 2021 |
- all employer contributions regardless of the amount
- money put into your super through salary sacrifice
- any personal contributions you claim as a tax deduction
|
- $27,500 p.a. (carry forward rules also apply)
|
Carry-forward concessional contributions
It is possible to carry forward unused concessional contributions cap space amounts from 1 July 2018. The first year in which you could increase your concessional contributions cap by the amount of the unused cap was 2019-20, but only if you had a total superannuation balance of less than $500,000 at the end of 30 June in the previous year. Unused amounts are available for a maximum of five years, and will expire after this.
What if I go over the concessional contribution cap?
Excess concessional contributions are included in your taxable income, taxed at your marginal tax rate. If you exceed your annual cap you can elect to withdraw up to 85% of your excess concessional contributions (15% contributions tax has already been paid on these amounts) from super. The Australian Taxation Office (ATO) will contact you to explain your options. If there’s a chance you could exceed your cap you should talk to your payroll area or contact us.
Can I manage my contributions?
If you are a higher paid Queensland local government employee and likely to exceed the concessional contributions cap due to the higher employer and member contributions required under the Local Government Act (2009), talk to your payroll area about limiting your contributions to the cap.
Tax deduction for personal contributions
Anyone under age 67 and those aged 67 to 74 who satisfy the work test can claim a tax deduction for contributions made from after-tax money. However, when claimed as a tax deduction, these contributions will count towards the concessional contributions cap and be taxed at 15% when paid into a super account.
What if I don’t reach the concessional contributions cap?
From 1 July 2018, anyone with a total superannuation balance less than $500,000 (at the end of a financial year), can carry forward the unused portion of their concessional contributions cap on a rolling basis for a period of 5 years. This means from 1 July 2023, you can add the unused portion of your annual concessional contributions cap from the last 5 financial years to your 2023/24 annual cap. Amounts not used will expire after 5 years.
Defined benefits
If you have a defined benefit a specific formula is used to work out the value of concessional contributions that have been made and these are referred to as your notional taxed contributions (NTC).
If your NTC exceeds the concessional contributions cap your contributions are still considered to be within the cap and will not be subject to additional tax. However, any additional concessional contributions on top of the NTCs in excess of the concessional contributions cap will be subject to the additional tax. Download the relevant defined benefit guide from brightersuper.com.au to find out more about the NTC calculation.
Non-concessional contributions cap
Non-concessional contributions are made from income you have already paid tax on. The annual non-concessional contributions cap is $110,000. for the 2023/24 financial year. This increased from $100,000 in the 2020/21 financial year.
| Non Concessional contributions include… |
Cap from 1 July 2021 |
- contributions made from after-tax money
- includes any spouse contributions you receive
- any personal contributions not claimed as a tax deduction
|
- $110,000 p.a.
- $330,000 as a lump sum or spread over a 3-year period if you are under age 75*.
- Transitional rules also apply.
|
*If an individual entered into a bring forward arrangement before 1 July 2021, the previous bring forward limit of $300,000 will apply.
What if I exceed the non-concessional contributions cap?
Contributions made above the cap will be taxed at the maximum rate of 47% (including the Medicare levy). If you go over your non-concessional contributions cap, you can elect to withdraw any excess contributions and associated earnings from your super as determined by the ATO.
Bring forward rule
If you are under age 75 at any point in a financial year you may be able to ‘bring forward’ the next 2 years’ non-concessional contributions caps. This means you can contribute up to $330,000. Eligibility criteria may apply so please contact us for more information. It is important to note that if an individual enters into a bring forward arrangement before 1 July 2021, the previous bring forward limit of $300,000 will apply.
Upper threshold for non-concessional contributions
If you are under age 74 at any time during the financial year, you can bring forward up to two years of non-concessional contributions, providing your Total Superannuation Balance at 30 June of the previous year is less than $1.68 million.
| Total Super Balance 30 June |
Maximum non-concessional cap for the first year |
Bring-forward period |
| Less than $1.68m |
$330,000 |
3 years |
| $1.68 to less than $1.79m |
$220,000 |
2 years |
| $1.79m to less than $1.9m |
$110,000 |
No bring forward period |
| $1.9m |
Nil |
Nil |
Where the bring forward rule is used, total non-concessional contributions made in the three-year period (starting on 1 July of the first financial year in which non-concessional contributions exceeded the cap) cannot exceed the bring forward cap for the year in which the bring forward is triggered. This means the bring forward cap available for the three-year period is not indexed if the non-concessional contributions cap is indexed in that period.
Go to www.ato.gov.au for details and you should seek advice from Brighter Super on how this may impact your personal circumstances prior to making a contribution.
