There are limits on how much money you can put into super each year without penalty. These are called ‘contribution caps’.
There are two types of super contributions:
Roughly speaking, concessional contributions include:
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Broadly, non-concessional contributions include:
The concessional contribution cap is the limit that applies to before-tax contributions made to your super in a financial year before extra tax kicks in. For the 2017-18 year, it is $25,000 each year, regardless of your age.
The non-concessional contribution cap is $100,000 for 2017–18.
If you’re under 65 and have less than $1.6 million in your super account at the end of 30 June in the previous financial year, you can use the ‘bring forward rule’ and make after-tax contributions of up to three times the annual non-concessional cap in a single year without needing to pay extra tax.
Transitional arrangements apply for members who have made after-tax contributions in the 2015-16 or 2016-17 financial years, but haven’t fully used their ‘bring forward rule’ before 1 July 2017.
The government taxes contributions above the cap at your marginal rate. But you’re allowed to withdraw any excess concessional contributions from your super account.
If you go over a contribution cap, you’ll receive an excess contributions tax assessment from the ATO. You’ll have to pay the excess tax yourself and/or by drawing on your super.
It’s important to realise that any concessional contributions over the cap will also count towards your non-concessional contributions cap.
See our How super works fact sheet.
Did you know that when you make extra payments it can make a big difference to your super balance? Should you be making before or after-tax contributions? Check with our fast, easy Contributions calculator.