While adding to your super is a great way to grow your retirement savings, the Australian Government caps the amount you can contribute to your super each year without paying extra tax. There are separate caps for concessional and non-concessional contributions. It’s a good idea to be aware of these limits and what happens if you exceed them.
What are concessional contributions?
Any money you put into your super from income that you haven’t yet paid tax on, or wish to claim a tax deduction for, will be treated as a concessional contribution for tax purposes. These include:
If you have a defined benefit a specific formula is used to work out the value of your concessional contributions that have been made. For more information, read the relevant Defined Benefit guide on our PDSs and guides page.
What are non-concessional contributions?
Non-concessional contributions are those made from income which you have already paid tax on. These include:
- voluntary contributions (lump sum or regular payments) not salary sacrificed
- standard member contributions not salary sacrificed
- any spouse contributions you receive
What are the caps?
|Cap for 2016/17||What happens if I exceed the caps?|
Your cap depends on your age at 30 June 2016:
Under 49 - $30,000
Any amount over the cap will be added to your assessable income and taxed at your marginal tax rate1, plus an excess contributions charge.
Any amounts over the concessional contributions cap will also count towards your non-concessional contributions cap.
|Non-concessional||Your cap is $180,000, or if you’re under age 652, it can be $540,000 by bringing forward your cap by up to 3 years.||Any amounts over the cap will be taxed at the highest marginal tax rate of 49% (including the Medicare levy and the Temporary Budget Repair levy)|
1. Your marginal tax rate depends on your annual income and includes the 2% Medicare levy. An additional 2% will also apply (for the Temporary Budget Repair levy) if you earn $180,000 p.a. or more
2. To qualify for the 'bring forward' rule you must be aged under 65 years for at least one day of the financial year.
What happens if I exceed the caps?
Any contributions over either cap will be subject to extra tax (as outlined in the table above). You can, however, choose to withdraw your excess contributions.
You can withdraw up to 85% of your excess concessional contributions (15% contributions tax has already been paid on these amounts).
You can also withdraw all of your excess non-concessional contributions and 85% of the associated earnings (some tax has already been paid on the investment earnings).