Knowing how much you can contribute to super in any one year is important to ensuring you do not incur any unnecessary taxes or penalties.
Let’s check out the maximum super contribution limits for 2023/2024, as well as any exceptions to the general rules.
Super Contribution Caps
There are many factors that determine your contribution cap and eligibility, including your age, employment status, the type of contribution, your account balance and previous contributions.
To begin with, there are two types of contributions you can make into super, each with their own cap amount and accompanying rules.
The two types of contributions you can make into super are concessional contributions and non-concessional contributions.
Concessional Contribution Cap
The general concessional contribution cap is $27,500 per person for the 2024 financial year. This is the maximum amount that can be contributed into super as a concessional contribution, subject to the exceptions.
You will need to be mindful of any age limit restrictions in making personal concessional contributions, as well as work test requirements when over age 67.
Concessional Contribution Cap Exceptions
Carry-Forward Unused Cap Rule
You may be eligible to carry-forward any unused concessional contribution caps from previous financial years and utilise them in the current financial year. By doing, so you could exceed the general concessional contribution cap, without any repercussion.
What Happens If I Contribute More Than $27,500?
If you contribute more than the $27,500 concessional contribution cap, there may not be a cause for concern if you are eligible to utilise any unused carry-forward cap amount. Otherwise, the excess amount will be taxed at your marginal tax rate (plus interest on concessionally-taxed earnings) and you will have the choice to leave it within super or withdraw the net after-tax amount.
When making concessional contributions, you should take into account superannuation contributions tax. This video explains how much contributions tax you will pay.
Non-Concessional Contribution Cap
The general non-concessional contribution cap is $110,000 per person for the 2024 financial year. This is the maximum amount that can be contributed into super as a non-concessional contribution, subject to the exceptions.
A non-concessional contribution is an after-tax contribution made into super that you (or the contributor) has not claimed a tax deduction for.
You will need to be mindful of any age limit restrictions in making non-concessional contributions when aged 75 or more. Also, you are unable to make any further non-concessional contributions if your total superannuation balance exceeded the transfer balance cap of $1.9 million on the most recent 30 June (i.e. end of the previous financial year).
Non-Concessional Contribution Cap Exceptions
While under age 75, you may be eligible to bring-forward up to two additional years worth of the cap, enabling you to contribute up to $330,000 at any point over a 3-year period with no regard to the annual $110,000 cap.
The home downsizer contribution allows you to contribute up to $300,000 of home sale proceeds into superannuation without counting towards the non-concessional contribution cap. You need to be aged 55 or over to make a downsizer contribution and the $300,000 contribution can be made by both members of a couple.
Related article: Home Downsizer Contributions
What Happens If I Contribute More Than $110,000?
Contributing more than $110,000 to super as a non-concessional contribution in any one year will automatically trigger the bring-forward rule. If you are not eligible to utilise the bring-forward rule, you will have the option of withdrawing the excess contributions and 85% of the associated earnings. The earnings will then be taxed at your marginal tax rate. If you decide to leave the excess contribution amounts within super, the excess amounts will be taxed at the highest marginal tax rate of 47%.
It is prudent to keep track of your contributions throughout the year. This can be done by logging in to your superannuation account and calculating contributions in the transaction statement. Alternatively, you can phone your super provider and ask for the amount and types of contributions made and whether you are nearing the maximum limit amounts.
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