Superannuation Contribution Cap Limits
- Arnold Shields
- Jan 19, 2011
- 3 min read
Updated: Jun 16
What Are Superannuation Contribution Caps?
A superannuation contribution cap limits how much you can contribute to your Self-Managed Super Fund (SMSF) or industry fund each financial year. Exceeding the cap can result in significant tax penalties. Understanding the caps and how they apply to concessional and non-concessional contributions is essential to optimise your super and avoid unnecessary tax.
Concessional Contributions
Concessional contributions are before-tax contributions and are taxed at 15% in your fund. These include:
Super Guarantee (SG) contributions from your employer
Salary sacrifice amounts
Personal contributions claimed as a tax deduction
Annual Concessional Contribution Caps (historic)
Income Year | Cap Amount |
2010–11 | $25,000 |
2009–10 | $25,000 |
2008–09 | $50,000 |
2007–08 | $50,000 |
Increased Cap for Those Aged 50 or Over (pre-2012)
Income Year | Cap (Age 50+) |
2007–09 | $100,000 |
2009–12 | $50,000 |
If you contribute to more than one fund, all concessional contributions across all funds are added together toward the cap. This cap was not indexed during that period.
Proposed Change
There’s a government proposal (pending legislation) to permanently increase the concessional cap to $50,000 for individuals over 50 years old with total super balances under $500,000. Keep an eye out for updates once legislation passes.
Non-Concessional Contributions
Non-concessional contributions are after-tax contributions, such as personal contributions from your savings that are not claimed as a tax deduction.
Annual Non-Concessional Contribution Caps
Income Year | Cap Amount |
2010–11 | $150,000 |
2009–10 | $150,000 |
2008–09 | $150,000 |
2007–08 | $150,000 |
These contributions are not taxed in the fund, and you do not receive a tax deduction for making them.
Why Are There Caps?
Superannuation caps exist to prevent individuals from injecting large sums into their super accounts just before retirement to exploit concessional tax rates, such as the 15% fund income tax rate or 0% in retirement phase, rather than paying higher marginal tax rates in their personal names.
Benefits of Non-Concessional Contributions
The key advantage is that earnings on your investments within the fund can be tax-free once you retire. Compare this with investing in your own name, where you may pay tax on interest, dividends, and capital gains.
Important Tip: No Carry Forward for Non-Concessional Contributions
If you don’t use your full cap in a year (e.g., contribute only $50,000 of your $150,000 cap), the remaining $100,000 does not carry forward to future years. Use it or lose it.
The 3-Year Bring-Forward Rule (Under Age 65)
If you're under 65, you may be able to contribute up to $450,000 over a three-year period using the bring-forward rule. This allows you to exceed the $150,000 annual cap without breaching the law, so long as total contributions don’t exceed $450,000 over three years.
Example Scenarios
Year 1 | Year 2 | Year 3 | Total | Valid? |
$200,000 | $150,000 | $100,000 | $450,000 | ✅ Yes |
$200,000 | $250,000 | $0 | $450,000 | ✅ Yes |
$200,000 | $175,000 | $75,000 | $450,000 | ✅ Yes |
$200,000 | $100,000 | $150,000 | $450,000 | ✅ Yes |
Tax on Excess Contributions
If you exceed your non-concessional cap, you may be slugged with an excess contributions tax of 46.5% on the amount over the cap, so it’s critical to track all your contributions carefully across all super funds.
Summary
Concessional and non-concessional contributions have separate annual caps.
Exceeding the caps may result in significant tax penalties.
Strategic use of the bring-forward rule can help boost your retirement savings legally.
Contributions to multiple funds are aggregated—track your total contributions closely.
The goal: tax-effective wealth accumulation inside super, not in your personal name.
Need Help with Your Super Contributions?
Get tailored advice to make the most of your superannuation caps without falling into tax traps. Contact Dolman Bateman for expert superannuation and retirement planning advice.
Disclaimer:
The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.
