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:
Before-tax contributions include:
After-tax contributions include:
The before-tax 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 2020-21 year, it's $25,000 each year, regardless of your age.
If you haven’t used all of your cap in any financial year from 1 July 2018, you may be able to carry forward the unused cap amounts to use in future financial years. You can carry forward the unused before-tax contributions for up to five years if the sum of all you super accounts was less than $500,000 at the end of the previous year. Amounts carried forward that haven’t been used after five years will expire.
The after-tax contribution cap is $100,000 for 2020-21.
You can’t make any after-tax contributions if your total super balance was greater than $1.6 million at the end of the previous financial year.
If you were under 65 at any time during the financial year and your total super balance was less than $1.6 million at the end of the previous financial year, you may be able to bring forward two year’s worth of after-tax contributions. This means that you could contribute up to three times the annual cap in one year (but less in future years) if you’re eligible. The ‘bring-forward rule’ is automatically triggered when your after-tax contributions exceed the relevant cap in a financial year.
Tax penalties may apply if you exceed the caps. But you’re allowed to withdraw any excess 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.