Super Contribution Caps: What You Need to Know
Super Contribution Caps: What You Need to Know

With so many rules, varying tax implications and different kinds of funds, superannuation can get a bit confusing at times. One of the aspects that many people have questions about is super contribution caps. What are they, why are they there, and how do they affect my super contributions?
At Lifestyle Led Wealth, we can help you figure out your contribution caps and anything else to do with superannuation planning, including super investments, co-contributions, and retirement strategy.
What Are Superannuation Contribution Caps (and Why Do They Exist)?
Super caps are limits on the amount of voluntary super contributions you can make in one financial year.
If you’re employed, your employer is legally required to pay a super guarantee (SG) to your chosen super fund. Currently, the SG is set at 11.5% of ordinary time earnings.
Beyond this amount, you can make voluntary contributions to grow your retirement fund and save on tax. But you can’t put in as much money as you want; there are limits in place depending on the type of contributions you’re making and other factors.
It might seem counterintuitive to limit how much people can save for their retirement, but there are good reasons for these caps. Here are the three main ones:
- To prevent individuals from exploiting the lower tax rate of 15% on super contributions and earnings. If these limits were absent, people would channel large sums of money through their super to evade taxes.
- The lower tax charged on super contributions is potential revenue the government forgoes. So the tax office limits how much income can be put into a super fund to avoid losing out on billions of dollars in tax revenue.
- Having caps encourages people to start retirement contributions early and maintain them. Otherwise, people might wait until they are close to retirement and then deposit large sums of money, but they would still save less than if they’d been saving a small amount each year throughout their working life.
Concessional and Non-Concessional Contributions Cap
There are two main types of voluntary contributions you can make to your superannuation fund, and each has its cap.
Concessional Contributions
Concessional, or before-tax contributions, is the money you send to your super fund from your pre-tax income. The most common type of concessional contribution is a salary sacrifice, where you ask your employer to send a portion of your salary to your super.
The super guarantee from your employer (and any amount they contribute on top of SG), as well as any personal super contributions you make that you claim a tax deduction on, also count as concessional contributions.
The yearly cap on concessional contributions is $30,000 as of 1 July 2024. Be especially careful not to exceed this cap if:
- You have multiple employers, all contributing super guarantee.
- You have multiple superannuation accounts that you contribute to.
All concessional contributions from multiple sources and to multiple accounts all count towards the $30,000 cap.
If you exceed this cap, the excess contributions are included as part of your assessable income and will be taxed at your marginal rate (in other words, you pay more tax).
Note: In some cases, you will not be taxed extra if you exceed the cap. If, in the last five years, there were years you did not reach the $30,000 cap, you can bring the balance forward as long as your super account balance is under $500,000. Whenever you exceed the cap, unused concessional cap amounts from the last 5 years are applied automatically – these are called concessional catch-up contributions.
If, even after applying the unused cap amounts, you still exceed the concessional contributions cap, then you could face additional tax.
Non-concessional Contributions
Non-concessional, or after-tax contributions, are any payments you make to your super from your after-tax income.
After your employer pays your salary (meaning it’s already been taxed), any voluntary super contributions from your income is non-concessional.
The non-concessional contributions cap as of July 1 2024 is $120,000. If you exceed this cap within a particular financial year, you could face additional taxes.
To avoid the extra tax, you may be eligible for the bring-forward arrangement that allows you to use up to two future years’ caps in advance. In other words, you can use your after-tax super contributions caps for the next 1 or 2 years and apply them to the current year. For instance, when you bring forward your cap from the next two years, your total non-concessional cap for the current year will be $360,000.
This enables contributions of up to three times the annual cap in the first year, with unused amounts available in subsequent years. Eligibility depends on age and total super balance, with additional restrictions on certain contribution types.
Which is the Best Type of Super Contribution for Me?
The ideal type of voluntary super contribution depends on your particular situation and what tax incentives you want to take advantage of. Ultimately, a financial advisor is best placed to guide you in choosing the most tax-efficient contribution. Here are some general tips to keep in mind.
- Concessional super contributions are most tax-effective if your salary is above $45,000. This is when the 15% concessional tax rate is most beneficial.
- For business owners paying themselves through dividends from a family trust, consider waiting until close to June 30 to decide how much super contributions to make. This gives you plenty of time to assess your total taxable income and decide how much you can contribute to your super to reduce your tax and build your retirement savings. You’ll also be better aware of your cash flow, ensuring you don’t contribute too much and leave your business struggling.
- If you’ve maxed out your pre-tax/concessional cap, you can still make non-concessional/after-tax contributions until you hit the $120,000 limit. Even though you won’t get immediate tax deductions, there are still some tax benefits. Your non-concessional contributions are part of the tax-free component of your super balance, meaning future retirement withdrawals will not be taxed.
Non-concessional contributions are especially beneficial if you’re planning to leave your super to your non-tax dependent beneficiaries, such as your adult children. These contributions remain tax-free when they are paid out to beneficiaries. In contrast, the taxable component of your super could be subject to a tax rate as high as 32%.
Want to Learn More About Your Voluntary Super Contributions?
Superannuation planning can get complicated, and without a solid strategy, you might miss out on many benefits and incentives that you can enjoy now and when you retire.
At Lifestyle Led Wealth, we can help you navigate the complexities of super contribution caps with personalised advice that saves you money now while building wealth for your retirement.
Contact us at 03 9847 7516 to talk to Justin, our financial planner, about your voluntary super contributions. Disclaimer: The information contained in this document is of a general nature only and has been prepared without taking into account your objectives, financial situation or needs.