Super Contribution Caps: Maximising Your Tax-Advantaged Savings

Super is the most tax-effective way to save for retirement in Australia—if you understand the caps. Here's how concessional and non-concessional contributions work, and how to use catch-up rules.

The Two Types of Contributions

Concessional Contributions

These contributions are taxed at 15% when they enter your super fund—much less than most people's marginal tax rate. The $30,000 cap includes:

• Super Guarantee (SG): Your employer's mandatory 11.5% contribution
• Salary sacrifice: Extra amounts your employer contributes from your pre-tax salary
• Personal deductible: Contributions you make personally and claim as a tax deduction

Division 293 Tax

If your income plus concessional contributions exceeds $250,000, you pay an extra 15% tax on the super contributions above the threshold. This brings the effective tax rate to 30%—still less than the top marginal rate of 47%.

Catch-Up Contributions

Didn't use your full $30,000 cap in previous years? You might be able to catch up.

Since 1 July 2018, you can carry forward unused concessional cap amounts for up to 5 years, provided your total super balance is under $500,000 at the previous 30 June.

This is particularly useful for:

• People returning to work after career breaks
• Those who receive a bonus or windfall
• Self-employed people with variable income

Non-Concessional Contributions

These are contributions from money you've already paid tax on. No tax going in, but also no deduction. The main benefit is the low 15% tax on investment earnings inside super (compared to your marginal rate outside).

The annual cap is $120,000, but you can use the "bring-forward rule" to contribute up to 3 years' worth at once ($360,000) if you're under 75.

Total Super Balance Limits

Your ability to make non-concessional contributions depends on your total super balance:

• Under $1.66M: Full $120,000 annual cap, full bring-forward available
• $1.66M - $1.78M: $240,000 bring-forward cap
• $1.78M - $1.9M: $120,000 cap, no bring-forward
• $1.9M+: No non-concessional contributions allowed

Contribution Strategies

For High Income Earners

Max out concessional contributions first (even with Division 293, the tax benefit is substantial). If you have more to invest, use non-concessional contributions up to the cap.

For Those Approaching Retirement

Consider catch-up concessional contributions to boost your super in the final working years. The bring-forward rule for non-concessional contributions can also be useful for lump sums from asset sales or inheritance.

For Lower Income Earners

The government co-contribution adds up to $500 to your super if you earn under $58,445 (2024-25) and make a personal non-concessional contribution. At incomes under $43,445, you get the full $500 for a $1,000 contribution—a 50% instant return.

Excess Contributions Tax

Exceed the caps and you'll pay extra tax:

• Excess concessional: Taxed at your marginal rate (minus the 15% already paid), plus an interest charge
• Excess non-concessional: 47% tax on the excess, or you can elect to withdraw it

Track your contributions carefully, especially if you have multiple super funds or change jobs during the year.

How Talk Through Wealth Helps

Optimise your super contribution strategy:

• Track concessional cap usage including employer SG
• Calculate available carry-forward amounts
• Model the tax benefit of different contribution strategies
• Project super balance growth under different scenarios
• See how contributions affect Age Pension eligibility