What Happens When You Go Over the Concessional Cap
Exceeding the concessional contributions cap does not attract a penalty rate. The excess is added to your assessable income and taxed at your marginal rate, with a 15% tax offset for the contributions tax the fund already paid, plus an interest charge for the deferral. The result is that going over costs you the difference between your marginal rate and 15%, not the whole amount.
- The answer: Excess concessional contributions are included in your assessable income, taxed at your marginal rate, and reduced by a 15% offset for the tax the fund paid.
- The trap: The excess also counts towards your non-concessional cap unless you elect to release it, which is how one breach turns into two.
- The recommendation: Elect to release 85% of the excess. It keeps the amount out of your non-concessional cap and gives you the cash to pay the tax.
Where the AI summary above gets this wrong
"If you exceed the concessional contributions cap you will be hit with excess contributions tax on top of the 15% contributions tax."
That's surface-true. Here's what it misses:
- There is no separate excess contributions tax on concessional amounts any more — The regime changed. The excess is now included in assessable income and taxed at your marginal rate, with a 15% offset for the tax the fund already paid — so the cost is the gap between the two rates.
- The bigger risk is the flow-on to the non-concessional cap — An unreleased excess counts towards the non-concessional cap as well, which can trigger a second and much more expensive breach in the same year.
01 What the cap counts
Concessional contributions are employer Superannuation Guarantee contributions, salary sacrifice, and personal contributions for which you claim a deduction. They all count against the same cap, which is why an employer contribution rise can cause a breach for someone who has not changed their own arrangements.
The cap is measured on contributions received by the fund in the financial year, not on the pay period they relate to. A June salary sacrifice paid to the fund in July counts in the following year, and a bonus contributed at the end of June counts in the current one — which is where most accidental breaches come from.
Unused cap from earlier years can be carried forward where your total super balance is below the threshold, which raises the effective cap for that year. The mechanics of that are in the catch-up contributions guide, and checking your carry-forward balance is the first thing to do before concluding you have gone over.
02 How the excess is taxed
The excess is included in your assessable income for the year and taxed at your marginal rate. A 15% tax offset is applied for the contributions tax the fund already paid on the same money, so you are not taxed twice on it.
An excess concessional contributions charge is also applied. It compensates for the fact that the tax was collected later than it would have been on ordinary income, and it runs from the start of the income year until the tax is assessed.
The net cost is therefore your marginal rate minus 15%, plus the charge. For someone on 32% that is around 17% of the excess; for someone on 45% it is around 30%. The worked example below applies it to your own figures.
Shows: the additional tax on a concessional contribution above the cap: your marginal rate on the excess, less the 15% offset for the contributions tax the fund already paid. Ignores: the excess concessional contributions charge, the Medicare levy, Division 293 tax where it applies, and the flow-on to your non-concessional cap if you do not elect to release.
03 The release election, and why to make it
You may elect to have up to 85% of the excess released from your fund and paid to you. The 85% reflects the 15% already taken as contributions tax, and the released amount is used to help pay the assessment.
The stronger reason to elect is what happens if you do not. An excess concessional contribution left in the fund counts towards your non-concessional cap, and a second breach there is assessed under harsher rules described in the non-concessional contributions reference. One administrative slip becomes two.
The election is made in response to the ATO determination, within the period the notice specifies. Missing that window is the failure mode: the tax is payable either way, and the only thing lost by inaction is the release and the protection of the non-concessional cap.
Source: ATO — Understanding concessional and non-concessional contributions
The mistake I see is people assuming a breach is a disaster and not opening the letter. It is not a disaster — it is a correction that costs the gap between your marginal rate and 15%. What does real damage is ignoring the determination, because the release election has a deadline and the non-concessional flow-on does not forgive you for missing it.
FAQ
What happens if I exceed my concessional contributions cap?
The excess is added to your assessable income and taxed at your marginal rate, with a 15% offset for the contributions tax the fund already paid, plus an excess concessional contributions charge. You can elect to release up to 85% of the excess from the fund.
How is excess concessional contributions tax calculated and can I withdraw the excess?
It is your marginal rate on the excess less a 15% offset, plus an interest charge for the deferral. Up to 85% of the excess can be released to you on election, and the released amount helps pay the assessment.
Do employer contributions count towards my cap?
Yes. Superannuation Guarantee contributions, salary sacrifice and personal deductible contributions all count against the same concessional cap, measured on what the fund receives during the financial year.
Sources
Regulator references
- ATO — Concessional contributions cap · Australian Taxation Office · 2026The concessional contributions cap, the carry-forward of unused cap, and what counts against it.Last verified: 2026-09-07
- ATO — Caps, limits and tax on super contributions · Australian Taxation Office · 2026How the contribution caps fit together and what happens when one is exceeded.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.