The tax laws limit the amount of money you can voluntarily contribute to your super account on a concessional basis. This is achieved by setting the superannuation contribution limits which operate to ration the tax benefits available each year.
There is no limit to how much super you are allowed to accumulate, but there is a limit to the tax concessions you can receive on each year’s contributions.
Making contributions over the limits results in additional tax payable, such that in most cases the tax on contributions will be at least 46.5% (49% from 2014-15). In addition, excess concessional contributions are counted towards the non-concessional cap.
This potential tax effect means that in most instances members will want to keep super contributions within the allowable caps limits which are set in relation to age and the financial year of contribution – or claim relief under provisions which (from 1 July 2013) allow for a claw back of excess contributions to be taxed at marginal tax rates (see “update” note below).
Superannuation contribution caps are categorised as concessional, non-concessional and CGT amounts, with some further differentiation based on the age and status of the superannuation fund member.
Concessional Contributions Caps
Concessional contributions are essentially those contributions which are tax deductible, and include employer contributions and personal contributions claimed by the self-employed.
- 2014-15 the concessional cap is $35,000 for anyone aged 49 years or more on 30 June 2014. Otherwise the cap is $30,000.
- 2013-14 the concessional cap is $35,000 for anyone aged 59 years or over on 30 June 2013. Otherwise the cap is $25,000.
- 2012-13 the concessional cap for all age groups was $25,000.
There are some conditions and restrictions after the age of 65 – see notes below.
|Income Tax Year||Under 50||Age 50
|Age 50 to 59||59 years
or over on
30 June 2013
or over on
30 June 2014
* For 2013-14 the cap for being 59 years old or over on 30 June 2013 is $35,000
** For 2014-15 the cap for being 49 years old or over on 30 June 2014 is $35,000.
- A work test applies between the ages of 65 and 74
- At 75 years and over, only mandated super guarantee or award contributions can be made.
Up to 30 June 2013 employee super guarantee entitlements ceased at age 70 years, but from 1 July 2013 those entitlements continue.
The concessional contributions cap is indexed in line with average weekly ordinary time earnings (AWOTE), in increments of $5,000 (rounded down).
Non-Concessional and CGT Caps
Non-concessional contributions are those made from after-tax income, and there is therefore no contributions tax applied when contributed to the super fund. Once in the fund, the normal fund tax rates apply to earnings.
|Non-concessional and CGT Caps|
Concessional Contributions For Over 50 Year olds
From 1 July 2012 there is a general concessional contributions cap of $25,000. For people aged 50 or more, an increased concessional contributions cap applied until 30 June 2012, non-indexed.
|50 and over’s Concessional Cap|
Under previously announced government proposals, the concessional cap was to have been permanently retained at $50,000 for over 50s with total super balances below $500,000. However in 2012 Federal budget announcements, that measure was deferred.
- From 1 July 2013 the cap increases to $35,000 unindexed if aged 59 or more on 30 June 2013 and
- From 1 July 2014 the cap increases to $35,000 for individuals aged 49 or more on 30 June 2014.
Over 65 – work tests
Super fund contributors aged 65 years or more need to satisfy a work test which requires gainful employment for at least 40 hours during a consecutive 30-day period each financial year in which the contributions are made. Unpaid work does not qualify.
From 1 July 2013 contributors aged 70 or more are entitled to super guarantee payments from their employer.
For further information see Work Test
Non-Concessional Contributions Caps
Non-concessional contributions are essentially contributions not claimed as a tax deduction. Each tax year, the non-concessional cap is a multiple of the indexed concessional cap.
‘Bring Forward Rule’
Under 65 year olds have a ‘bring forward’ non-concessional cap allowance limit of 3 times their cap over a 3-year period. On that basis, the total 3-year non-concessional caps would be:
- for 2014-15 $540,000
- for 2013-14 $450,000
Note: If the bring forward rule is triggered in 2013-14, the three year limit remains $450,000 despite indexation uplifts which might otherwise apply to the 2014-15 and 2015-2016 concessional caps.
For further details of qualifying conditions see Bring-forward provision for people under 65 years old
Excluded from the non-concessional cap are contributions sourced in eligible personal injury payments, and contributions from small business disposals which can be dealt with under the lifetime CGT cap amount.
A transitional non-concessional cap of $1 million existed between 10 May 2006 and 30 June 2007. This transitional cap excluded eligible personal injury claims and small business disposals.
CGT Cap Amount
The CGT Cap allows the exclusion of eligible CGT amounts up to the CGT cap from the non-concessional cap. The CGT cap amount is a lifetime allowance and is indexed each year in line with AWOTE, in increments of $5,000 (rounded down).
Eligible CGT disposal amounts include:
- up to $500,000 of capital gains that have been disregarded under the small business retirement exemption
- the capital proceeds from the disposal of assets that qualify for the small business 15-year exemption
- the capital proceeds from the disposal of assets that would qualify for the small business 15-year exemption, but do not because the asset was a pre-CGT asset there was no capital gain, or the 15-year holding period was not met because of the permanent incapacity of the person (or a controlling individual of a company or trust).
For further information:
- Too much super can mean extra tax – Tax Office
- For summary of age and work test restrictions see Media Super
- Excess Contributions
This page was last modified on 30 December 2014