Caps on super contributions

Making additional contributions to your superannuation is a great way to build your retirement savings, but there are limits set by the Australian Government on how much you can add. Contributing too much could mean extra tax, so it pays to understand how the contribution caps work.

Types of super contributions

Before-tax (concessional) contributions

Before-tax contributions are also called ‘concessional contributions’ and include super from your employer, money you've put into your super from your before-tax pay (salary sacrificed contributions), and any contributions where you've claimed a tax deduction.

After-tax (non-concessional) contributions

After-tax contributions are also called ‘non-concessional contributions’ and include money you put into your super account from your after-tax income, and contributions from your spouse.

How the caps work in 2019-20

Before-tax contribution cap: $25,000 per year1 (or higher if you have carry forward before-tax contributions).

How contributions are taxed
Within the cap 15%
30% if your adjusted earnings is more than $250,000 per year
Over the cap Marginal tax rate plus interest charge

After-tax contribution cap: $100,000 per year (or $300,000 over three years if certain conditions are met). Nil if your total superannuation balance is $1.6 million or more.2

How contributions are taxed
Within the cap 0%
Over the cap 0% if you withdraw your excess contributions (and 85% of the associated earnings)3
47% if you do not withdraw your excess contributions

If your total super balance is less than $500,000 at 30 June, you can ‘carry forward’ any concessional contributions over a rolling five-year period. This means if you don’t use the full amount of your concessional contribution cap ($25,000 in 2019-20), you can carry-forward the unused portion and take advantage of it up to five years later.

For example, if you receive $10,000 in before-tax contributions in 2019-20, the $15,000 unused portion of your cap is effectively rolled over and added to your concessional cap for 2020-21, so you would be able to receive up to $40,000 in before-tax contributions in that financial year.

Amounts carried forward that have not been used after five years will expire.

If you’re under age 65 you can 'bring forward' up to three times the amount of the after-tax contribution cap – so up to $300,000. However, if you turn 65 during the financial year, you will need to meet the work test to contribute on, or after, your 65th birthday. Account balance conditions apply if you have more than $1.4 million in super:

Total superannuation balance Contribution and 'bring forward' available
Less than $1.4 million Access to full $300,000 cap (over three years)
$1.4 million to less than $1.5 million Access to $200,000 (over two years)
$1.5 million to less than $1.6 million Access to $100,000 cap (no 'bring forward', general non-concessional contributions cap applies)
Greater than or equal to $1.6 million Nil

For these purposes, your total superannuation balance is determined on 30 June of the previous financial year.

What happens if you go over the caps

What happens if you go over the contribution caps depend on whether your contributions are before-tax or after-tax.

If you exceed the before-tax (concessional) contribution cap

Any contributions you make over your before-tax limit will be taxed at your marginal tax rate. You may also be taxed for making excess contributions and interest charges may apply (with an entitlement to a 15% offset).

If you exceed the cap, the Australian Taxation Office (ATO) will send you details after you lodge your tax return. From there, you have a few options:

  • Withdraw the excess funds: You can withdraw up to 85% of your excess contributions from your super.
  • Leave the excess funds: You can choose to leave excess concessional contributions in super which will be added to your assessable income and taxed at your marginal tax rate. They will also count towards your non-concessional contributions.

    If you decide to leave the excess funds in your super account, you can elect to pay the additional tax and charges yourself or send the ATO a release authority and they will direct QSuper to pay the excess from your account on your behalf. Any amounts released will no longer count towards your non-concessional contribution cap.

If you exceed the after-tax (non-concessional) contribution cap

If you exceed your after-tax contributions limit, the ATO will send you details after you lodge your tax return. From there, you have two options:

  • Withdraw the excess funds: You can withdraw all excess after-tax contributions and up to 85% of any earnings from your account.
    If you do this, you will not be taxed on the contributions but the earnings will be included in your income tax assessment.
  • Leave the excess funds: If you choose to leave the excess contributions in your account, you will be taxed at the highest marginal tax rate of 47%.
    If you decide to leave the excess funds in your super account, the ATO will send a release authority to QSuper and direct us to pay the additional tax from your account on your behalf.

Ways to avoid going over the caps

It's important to keep an eye on your contributions throughout the year, including any you make to other superannuation funds.

  • You can keep track of the contributions made to your QSuper account by logging in to Member Online.
  • If you have estimated that you will exceed your before-tax (concessional) contribution cap, consider making after-tax (voluntary) contributions instead.
  • If the contributions your employer makes on your behalf will exceed the concessional contribution cap, you may have the option to decrease your salary for superannuation purposes. Please discuss this with your payroll office.
  • If you work for the Queensland Government, consider reducing your standard concessional contributions, or changing your standard contributions to after-tax contributions.

Contribute
Track your contributions in Member Online

Log in to Member Online to review your contributions throughout the year.

What else to consider