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What to do if you exceed your super contributions caps

Janine Mace

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 in on the prior 30 June. In 2025–26 the transfer balance cap is $2 million.

Note: From 1 July 2023 to 30 June 2025, the transfer balance cap was $1.9 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:

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.

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About the author

Janine Mace
Janine has over 25 years’ experience writing about superannuation, including a decade as Managing Editor of the ASFA’s highly respected industry magazine, SuperFunds. She has worked with a range of super funds and leading institutional investment managers. Her work has appeared in the Australian Financial Review personal finance section and she has been a regular contributor to Money Management and Financial Planning magazines.
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Responses

  1. Arun Birla Avatar
    Arun Birla

    Will this strategy work to apply contribution reserving strategy in retail super fund or will it lead to excess conc contributions?

    I have large CG from sale of a property and I would like to use contribution reserving strategy to bring forward conc contributions for next FY., ie. get 60k of deductions for conc contributions for current FY2024-25 and next FY2025-26.
    My super fund, Colonial First Super requires any contributions to be made before 3 pm for that day’s unit rates to be applied.

    According to my bank, CBA’s website, “If you make a payment using BPAY after 6pm Monday to Friday, the payment will be debited from your account instantly and processed the next business day. The biller will acknowledge the payment as having been made on the next banking business day.”

    So, if I make a contribution after 3 pm and before 6 pm on 30 June using BPAY, the Super fund should receive on 30 June and allotment should happen on 1 July.
    – the bank account will show contribution payment date as 30 June
    – it is not clear if the Super fund will show contribution date as 30 June or 1 July
    – the Super fund will apply unit rates on contribution for 1 July

    If that is so,
    – considering the super fund will apply unit rates for 1 July, will the Super fund count the contribution for next FY 2025-26, even if they show contribution date as 30 June?
    – In other words, what date is relevant for contribution to be counted for next FY 2025-26?
    1. bank account trx date or
    2. Super fund receipt date or
    3. Super fund allocation date ie date whose unit rates are applied?
    – can I claim the deduction for Super contribution for next FY 2025-26 in this FY 2024-25 as my bank account will show contribution date as 30 June?
    – In other words, what date is relevant for tax deduction to be claimed this year?
    1. bank account trx date or
    2. Super fund receipt date or
    3. Super fund allocation date ie date whose unit rates are applied?

    Your urgent reply will help me to save tax on CG realised from sale of property.

    1. SuperGuide Avatar
      SuperGuide

      Hi Arun,

      You need to speak to your super fund directly to find out which financial year contributions will be reported for if they are processed by your bank on 30 June. Most funds have published cut off dates for the end of the financial year, but you may need to get in touch with their contact centre. Usually, if the unit price for 1 July 2025 is received, then the contribution would be included in the 2025-26 financial year’s reporting and could be claimed as a tax deduction against that year’s income. To claim a deduction against 2024-25 income, the contribution would need to be allocated and reported on or before 30 June 2025.

      It is also important for you to be aware that retail super funds do not offer contribution reserving strategies. Contributions received during the financial year are allocated immediately to member accounts.

      Contribution reserving is a strategy available in self managed super funds (SMSFs) that allows the fund to add contributions to a reserve rather than a member account, permitting the member to claim a tax deduction in the financial year the contribution was made while the contribution is not added to their account (and counted towards contribution caps) until the following financial year. This is possible in SMSFs for contributions made in June thanks to a regulation that permits SMSFs to delay the allocation of contributions up to 28 days after the end of the month they were received. If you do not have an SMSF, then this strategy is not available to you.

      Best wishes
      The SuperGuide team

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