For most high income earners, saving for your retirement through super is a sensible strategy, but you need to watch you don’t fall foul of the dreaded Division 293 tax. This delightfully named tax is an extra charge imposed on super contributions made by higher income earners. It is designed to reduce the tax ... Read more
Excess contributions
The amount of money you can deposit in superannuation fund each year, is subject to superannuation contributions caps.
Concessional (before-tax) contributions are subject to an annual concessional contributions cap, which is increased periodically.
Non-concessional (after-tax) contributions are also subject to an annual non-concessional contributions cap (indexed in line with the concessional contributions cap), and Australians under the age of 65 can bring forward up to 2 years of the non-concessional cap in a single year (bring-forward rule).
If your super contributions (concessional or non-concessional) exceed the relevant cap, the amount of super contributions above the cap are known as excess contributions – excess concessional contributions if above the concessional cap, and excess non-concessional contributions if above the non-concessional cap.
For a summary of the excess contributions rules, see SuperGuide article Excess contributions rules: A quick summary. For a quick explanation of the rules, continuing reading the next few paragraphs.
Excess concessional contributions
Excess concessional (before-tax) contributions and associated earnings are counted towards the person’s assessable income for the financial year in which the excess contributions were made, less a 15% tax offset for contributions and earnings tax already paid. Excess concessional contributions can be withdrawn from the super fund to pay the additional income tax.
Excess non-concessional contributions
Excess non-concessional (after-tax) contributions can be withdrawn, and the associated earnings on those excess contributions count towards the person’s assessable income, less a 15% tax offset for contributions and earnings tax already paid. If a person chooses not to withdraw the excess non-concessional contributions, then those excess contributions are subject to the top marginal rate of tax.
Below are key articles on excess contributions:
Set out below are all SuperGuide articles referring to Excess contributions.
The short story on super contributions rules (2018/2019 year)
You can make two types of superannuation contributions – concessional (before-tax) contributions and non-concessional (after-tax) contributions – and each type of contribution has a separate limit known as a contributions cap (see text and tables below). A concessional contribution is a before-tax contribution made ... Read more
Bring-forward rule: A definitive super guide
Note: The information in this article relates to the 2018/2019 financial year and the 2017/2018 financial year. The bring-forward rule allows an eligible Australian to contribute up to 3 years’ worth of after-tax contributions (non-concessional contributions) in one year, representing the annual non-concessional cap ... Read more
Your 2018/2019 guide to non-concessional (after-tax) contributions
Note: This article explains the rules applicable to non-concessional contributions for the 2018/2019 year (and for the 2017/2018 year, and later in the article explains the rules applicable for the 2016/2017 year). See also SuperGuide articles New normal: $100,000 non-concessional contributions cap and Non-concessional ... Read more
Super concessional (before-tax) contributions: 2018/2019 survival guide
Note: This article explains the rules applicable to concessional contributions for the 2018/2019 year (and for the 2017/2018 year, and later in the article, also explains the rules applicable for the 2016/2017 year). Superannuation contributions can be divided into two types — concessional (before-tax) contributions ... Read more
Super health check for beginners: 10 tips for your 2018/2019 retirement planning
Note: This article is current for the 2018/2019 financial year. SuperGuide regularly publishes an updated super checklist for beginner readers. More advanced checklists can be found elsewhere on the site. Use this list as a prompt for your 2018/2019 super resolutions. You may not keep all of your resolutions, but ... Read more
Excess contributions rules: A quick summary
If you plan to make superannuation contributions to a super fund, you need to be mindful of the contributions caps for both concessional (before tax) contributions and for non-concessional (after-tax) contributions. You also need to understand the financial (or other) consequences of exceeding those contributions ... Read more
Turning 65: Maxing out the after-tax contributions cap
Note: For the 2018/2019 year (1 July 2018 through to 30 June 2019), the annual non-concessional contributions cap is $100,000, and the 3-year bring-forward cap is $300,000. The $100,000 annual cap and the $300,000 bring-forward cap also applied for the 2017/2018 year. (For the 2016/2017 year, the annual after-tax ... Read more
Super for beginners, part 15: Super tax – as easy as 1-2-3
Superannuation only exists because of how super savings are taxed. Superannuation savings receive tax incentives to encourage Australians to choose super as a retirement savings option. Even so, superannuation is still taxed (for most Australians), but at a lower rate of tax than non-superannuation income and ... Read more
Boost your super: 10 planning tips for 2018/2019 year
Although many people are still grappling with the superannuation changes that took effect from July 2017, and several more that took effect from July 2018, it’s important to note that many of the underlying super rules remain unchanged. For example, the Superannuation Guarantee (SG) rates remain the same, contributions ... Read more
Non-concessional contributions: 10 facts about the $100,000 cap
The annual $100,000 non-concessional (after-tax) contributions cap became law on 29 November 2016, and took effect from 1 July 2017 (from the start of the 2017/2018 year), and continues to apply for the 2018/2019 financial year. We receive a lot of questions from readers seeking information about how the ... Read more
Understanding the transitional bring-forward rule (for 2018/2019 and 2017/2018 years)
Q1: What cap applies for the 2017/2018 year, if I triggered the bring-forward rules during the 2016/2017 or 2015/2016 years? Q2: What cap applies for the 2018/2019 year, if I triggered the bring-forward rules during the 2016/2017 year? Transitional arrangements apply for Australians who are in the middle of a ... Read more
Non-concessional contributions: Tread carefully when aged 63 or 64 or 65 (3 Q & As)
Note: For the 2018/2019 year, and for the 2017/2018 year, the non-concessional cap is $100,000 and the 3-year bring-forward cap is $300,000. For the 2016/2017 year, the non-concessional (after-tax) cap was $180,000, and the 3-year bring-forward cap was $540,000. Q: I am 64 and want to take advantage of the ... Read more
After-tax super contributions: Beef up using a bring forward
Note: For the 2018/2019 financial year (and for the 2017/2018 year), the annual non-concessional contributions cap is $100,000, and the 3-year bring-forward cap is $300,000. (For the 2016/2017 year, the annual after-tax contributions cap was $180,000 and the 3-year bring-forward cap was $540,000.) Q: Under the ... Read more
Super contributions: Bring-forward rule and your Total Superannuation Balance
Since 1 July 2017, your Total Superannuation Balance can affect how much you can contribute to a super fund. If your Total Superannuation Balance is $1.6 million or more (for the 2017/2018 year, or for the 2018/2019 year), then you cannot make any non-concessional (after-tax) contributions – your NCC cap is nil, and ... Read more