Understanding contribution caps

There are limits on how much you can pay into your super fund each financial year without having to pay extra tax. These limits are called ‘contribution caps’.

How much you can contribute to your super fund and whether your fund is allowed to accept your contribution may also depend on your age and total superannuation balance.

Contribution caps apply to all super funds. If you have more than one super fund, all your contributions are added up and count towards your caps.

If you exceed these caps, you may need to pay extra tax. You can avoid this by knowing about your own contribution caps.

For more information, check out this article on Super contribution caps.

Understanding the types of contributions

There are 2 types of contributions you (or others) can make into your super fund:

Concessional – These contributions come from income that has not yet been taxed. They are also called ‘before tax’ contributions. Once the concessional contributions are in your super fund, they are taxed at a rate of 15%. You may need to pay extra tax if you exceed the concessional contribution cap.

Non-concessional – These contributions come from income that has already been taxed. They are also called ‘after tax’ contributions. These contributions are not taxed once received by your super fund. However, you may pay tax on them if you exceed your non-concessional contribution cap.

Source: ato.gov.au May 2023

Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/Individuals/Super/In-detail/Growing-your-super/Super-contributions—too-much-can-mean-extra-tax/?page=2#Understanding_contribution_caps.

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