Although it can be hard getting your head around all the different types of super contributions that go into your super account, concessional contributions are the ones you are mostly likely to have and are pretty straightforward to understand. Concessional contributions – what’s that mean? Concessional contributions ... 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 Excess concessional contributions can be withdrawn from the super fund to pay the additional income tax.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Excess non-concessional (after-tax) contributions can be withdrawn, and the associated earnings on those excess contributions count towards the person’s assessable income, less a 15% tax offset for contributions and earnings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 that relate to Excess contributions.
A super guide to understanding the bring-forward rule
Note: In the 2019 Federal Budget on 2nd April the Treasurer pledged that if the Coalition win the next election Australians aged 65 and 66 will be able to make up to three years of non-concessional contributions under the bring-forward rule. Learn more about these and other super-related announcements. Putting money ... Read more
What to do if you exceed your super contributions caps
When experts talk about super, they often warn about the importance of not going over your contributions caps, but you don’t always hear about what happens if you do. Although carefully monitoring the amount of contributions you or your employer makes into your super account each year is the wisest course of action, ... Read more
2018/2019 guide to non-concessional contributions (after-tax super contributions)
Most employees know their employer is helping to build their retirement savings by making regular contributions – like the Super Guarantee (SG) – into their super account as part of their salary package. These contributions are taxed concessionally – or at a special low rate – of 15% to encourage Australians to save ... Read more
How the Division 293 tax works: Super surcharge for high earners
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
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, ... 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
Richest Australians to take super hit
Next month’s federal budget will hit the generous superannuation tax breaks received by the very richest Australians. The target will be the highest one to two per cent of earners, with the government arguing that the cutback is necessary to keep superannuation concessions sustainable over the longer term. ... Read more