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
Excess contributions
Excess super contributions are any payments you make to your super fund that cause you to exceed your contribution caps.
Contribution caps are limits on the super contributions you can make to your super fund each year. There are two types of contributions: concessional (before-tax) and non-concessional (after-tax), and each has a contributions cap.
If you exceed your concessional contributions cap, the excess amount is included as assessable income in your tax return. You will pay tax on it at your marginal tax rate, less the 15% tax you will already have paid in your super fund.
If you exceed your non-concessional contributions cap, the Australian Taxation Office (ATO) will give you the following two options.
- Withdraw the excess non-concessional contributions and 85% of the associated investment earnings within 60 days. If you don’t, the ATO will request that your super fund does this on your behalf.
- Leave the excess non-concessional contributions and associated earnings in your super account. If you choose this option, these amounts are taxed at the top marginal tax rate (currently 47%).
Set out below are all SuperGuide articles that relate to Excess contributions.
2019/2020 guide to concessional contributions (before-tax super contributions)
Although it can be difficult 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 ... Read more
A super guide to understanding the bring-forward rule
Putting money into your super account is easy. But to ensure you don’t take too much advantage of the generous tax benefits within the super system, the government has progressively tightened up the rules around making contributions. One way to get some extra money into your super account is by using a ‘bring-forward’ ... 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
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, if ... 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