Concessional Superannuation Contributions Cap
There is a cap on the concessional superannuation contributions you make to your superannuation each financial year. If you contribute over these caps, you may have to pay extra tax. The cap amount and how much extra tax you have to pay may depend on your age, which financial year your contributions relate to, and whether the contributions are:
- Concessional (before tax) or
- Non-concessional (after tax)
What are concessional superannuation contributions?
Concessional superannuation contributions include employer contributions (your supperannuation guarantee) including contributions made under a salary sacrifice arrangement and personal contributions claimed as a tax deduction.
If you have more than one superannuation fund, all concessional contributions made to all of your funds are added together and counted towards the concessional contributions cap.
What is the Cap?
As of 1 July 2017, your concessional contributions is capped at $25,000 for the 2017-2018 and future financial years. Previously, you could make concessioanl (pre-tax) contributions up to $30,000 ($35,000 for people aged 50 years and over) within a financial year.
Update: The concessional contributions cap will increase as of the 2021-2022 financial year to $27,500.
What happens if I contribute over the Cap?
You can contribute more than $25,000, but 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% concessional rate.
You can find out more about the excess concessional contribution charge here.
What happens if I don’t reach the Cap?
From 1 July 2018 if you have a total superannuation balance of less than $500,000 on 30 June of the previous financial year, you may be entitled to contribute more than the general concessional contributions cap and make additional concessional contrubutions for any unused amounts.
The first year you will be entitiled to carry forward unused amounts is the 2019-2020 financial year. Unused amounts are available for a maximum of five years, and after this period will expire.
How do I know when I am close to reaching the $25,000 Cap?
The best way to ensure you don’t go over the concessional contributions cap, is to contact your super fund directly.
