Non-concessional contributions include those:

• From a super fund you had overseas.
• Made by your spouse.
• From your employer from income after you pay tax.
• That are more than your capital gains tax cap amount.
• You have not claimed as a tax deduction.

Concessional contributions include:

• Those made by your employer that are compulsory.
• Salary sacrifice contributions.
• Notional tax contributions when you belong to a defined benefit fund.
• Any insurance or administration costs your employer pays.
• Contributions you pay that you do not claim as a tax deduction.

Contribution Caps

There are two different caps depending on the type of contributions you make to your super fund — non-concessional and concessional caps.

Non-concessional Caps

Non-concessional contributions to your super fund are those you make from your income after paying tax and, therefore, not subject to tax in your super fund.

The cap for non-concessional contributions is $110,000 for the 2021-22 financial year, but your personal cap may vary. It may be

• Higher if you use bring-forward arrangements that allow you to pay more without paying tax if you meet certain requirements.
• Zero if the total of the amount in your super is $1.7 million or more as of June 30, 2021.

Concessional Caps

The cap for concessional contributions in the 2021-22 financial year is $27,500 no matter how old you are. But if your super balance is less than $500,000 as of June 30 and you have not reached the cap for the you year, you can carry forward the difference. You can use this to make extra contributions over the next five years.

When you make concessional contributions to your super fund, there is a tax of 15%. If you pay too much into your fund and it exceeds the cap for that year, then the extra amount will attract tax at your marginal rate and you will receive an excess concessional contributions charge.

Your concessional contributions may also attract a higher rate of tax if your income combined with your contributions is more than $250,000 in the financial year. This is known as Division 293 tax.

Making Excess Contributions

While you can contribute more than the cap to your super fund in a year, you may need to pay extra tax:

• Non-concessional contributions. If your non-concessional contributions are more than the cap, you may be able to withdraw the extra amount and 85% of what that amount earned. The earnings on the excess amount will become part of your assessable income for the year and you will have to pay tax at your marginal rate. If you decide not to withdraw the additional amount, you could pay 47% tax on the amount.
• Concessional contributions. Where you pay more than the concessional cap, you are likely to have to pay tax at your normal marginal rate and not the 15% concessional rate. You will also have to pay an additional notional interest charge because you are paying tax later than you did on the rest of your income in that financial year. You can also choose to withdraw up to 85% of the excess contributions to help cover the extra tax you have to pay.

Super contribution caps are complex so it is important to receive advice from your accountant or a financial advisor before paying too much extra into your super fund. This will help you to avoid any tax implications.