How much can I add to super?

The government limits how much you can add to your super each year and still receive tax concessions. These limits are called contribution caps.

There are two types of payments you can make to your super. How much you can add to your super account each year depends on the type of payment you’re making.

Before tax contributions

Contribution cap: $25,000 pa. This amount will be indexed in line with average weekly ordinary time earnings (AWOTE), rounded down to the nearest $2,500. 

From 1 July 2018, if you have less than $500,000 in super and haven’t used all your annual before tax contribution cap over the previous five years, you’ll be able to make catch up contributions using unused cap amounts. 

This initiative starts in the 2018-19 financial year, but won't be retrospective. For example one year of catch up contributions can be used in the 2019-20 financial year, two years of catch up contributions can be used in the 2020-2021 financial year, and so on. The full five years of catch up contributions will be available in the 2023-24 financial year. 

Before tax contributions, also referred to as ‘concessional contributions’, is money you put into your super before any tax is taken out. They include:

  • compulsory 9.5% employer contributions; 
  • any salary sacrifice contributions your employer makes for you; and
  • any before tax contributions you split and give to your spouse. 

After tax super contributions you claim as a tax deduction will also count towards your before tax contributions cap.

After tax contributions

Contribution cap: currently $100,000pa or $300,000 over a three year period if you’re under age 65. The three year period starts when you contribute more than $100,000 in a financial year.

If you have more than $1.6 million in super you can’t make after tax contributions. If you have between $1.4 and $1.6 million in super your $300,000 three year cap will be lower. You can find more information at the Australian Taxation Office’s website.

An after tax contribution is money you put into your super from your take home pay after your tax is taken out or from other savings. After tax contributions are also referred to as ‘non concessional contributions’ and aren’t taxed within the fund.

What happens if I add more than the cap?

Before tax contributions 

If you go over the before tax contribution cap, you can either:

  • withdraw up to 85% of the excess contributions and have the excess amount included in your assessable income and taxed at your marginal tax rate, along with an interest charge. You’ll receive a 15% tax offset for the contributions tax already paid by your super fund.
  • keep the excess contribution in your super fund and have the excess amount included in your assessable income and taxed at your marginal tax rate, along with an interest charge. You’ll receive a 15% tax offset for the contributions tax already paid by your super fund. To help pay the extra tax, you can withdraw up to 85% of your excess before tax contributions from your super fund. The money kept in super will be added to your after tax contribution cap.

After tax contributions

If you go over the after tax contribution cap you can either:

  • withdraw the excess amount and earnings and include the earnings as part of your income, or
  • pay 49% tax on the excess amount.

Any excess before tax contributions that you don’t withdraw from your super fund will also count towards your after tax contribution cap.

 

For more information see our fact sheet How much can I add to my super account?