Superannuation Contribution Cap Limits

What is a contribution cap?

A contribution cap limits the amount of contributions we can put into our Self Managed Superannuation Fund or Industry Superannuation Fund in a financial year.  Any super contributed over a cap amount is subject to extra tax. The cap amount and how much extra tax you pay once you exceed it depend upon whether the contributions are Concessional or Non-Concessional contributions.

Concessional Contributions

Concessional Contributions are generally made to a super fund for or by you in a financial year and are included in the assessable income of the super fund (for example, super guarantee, salary sacrificed amounts and any amount you are allowed as a personal super deduction in your income tax return). This cap amount can be found below.

Income year Amount of cap
2010-11 $25,000
2009-10 $25,000
2008-09 $50,000
2007-08 $50,000

Concessional contributions cap for people 50 years old or over

An increased concessional contributions cap applies until 30 June 2012 for people 50 years old or over. If you were 50 years old or over, the annual cap for the 2007-08 and 2008-09 financial years was $100,000. If you are 50 years old or over, the annual cap for the 2009-10, 2010-11 and 2011-12 financial years is $50,000. If you have more than one fund, all concessional contributions made to all your funds are added together and count towards the cap. This cap is not indexed.

The government has announced changes that, if passed by parliament, will permanently increase the concessional contributions cap to $50,000 for individuals who have total super balances below $500,000 and are 50 years old or over. We will publish updated guidance if these announced changes become law.

Non-Concessional Contributions

Non-Concessional Contributions are generally made to a super fund by or for you in a financial year and are not included in the super fund’s assessable income (for example, personal contributions you make from your after-tax income). This cap amount can be found below.

Income year Amount of cap
2010-11 $150,000
2009-10 $150,000
2008-09 $150,000
2007-08 $150,000

Why there is a cap?

The cap prevents individuals from contributing huge sums of cash into their superfund in the years prior to retirement to benefit from the 15% tax rate on concessional contributions and on the income of the fund.

Benefit of Non-Concessional Superannuation Contributions

The main benefit of using the non-concessional superannuation contributions is to top up your superfund prior to retiring, to gain the benefit of the 0% tax on the superfunds income once you have retired. If you retired with this money and you invested it in your own name you would have to pay tax on this.

Tip for the $150,000 Non-Concessional Contributions Cap

Where the $150,000 non-concessional contributions cap has not been fully utilised in an income year (e.g. where an individual only makes $50,000 worth of non-concessional contributions), the unused amount (which is $100,000 in the example) cannot be carried forward to a future income year.

There is a existing 3 year averaging rule which allows individuals under the age of 65 to make non-concessional contributions of up to $450,000 in one year without breaching their cap. Here are some different scenarios:

  Year 1 Year 2 Year 3 Total
Scenario 1 $200,000 $150,000 $100,000 $450,000
Scenario 2 $200,000 $250,000 $0 $450,000
Scenario 3 $200,000 $175,000 $75,000 $450,000
Scenario 4 $200,000 $100,000 $150,000 $450,000

Non-concessional contributions (other than excluded contributions) in excess of the relevant cap will be subject to excess non-concessional contributions tax at the rate of 46.5%.