The Two Contribution Types and Their Caps
Every contribution to superannuation falls into one of two categories: concessional (pre-tax) or non-concessional (after-tax). Each has an annual cap - breaching either triggers an additional tax assessment. The caps are indexed periodically to AWOTE (Average Weekly Ordinary Time Earnings).
- Concessional contributions (CC) cap - $30,000 (2024-25): Concessional contributions include your employer's Superannuation Guarantee (11.5% of ordinary time earnings), any salary sacrifice you make, and personal contributions for which you claim a tax deduction. All are taxed at 15% entering the fund (30% for Division 293 earners above $250,000). The $30,000 cap was increased from $27,500 in 2024-25 due to AWOTE indexation
- Non-concessional contributions (NCC) cap - $120,000 (2024-25): Non-concessional contributions are made from after-tax money - they receive no tax deduction, but enter the fund at 0% tax rate. Used to build super balance beyond the CC cap. The NCC cap is four times the CC cap by design. Importantly, if your Total Super Balance (TSB) exceeds $1.9M at 30 June of the prior financial year, your NCC cap is $0 - you cannot make further NCCs
- What counts toward each cap: CC: employer SG + salary sacrifice + personal deductible contributions. NCC: personal after-tax contributions, spouse contributions received (but not government co-contributions). Transfers between super funds, rollovers, and pension commutations do not count as contributions. Insurance proceeds paid into super can sometimes count as NCCs - check the specific rules
- Government co-contribution: For low-to-middle income earners (below $58,445 in 2024-25), the government contributes $0.50 for every $1.00 of personal non-concessional contribution, up to a maximum co-contribution of $500. The co-contribution does not count toward the NCC cap and is a simple, underused super booster for eligible earners
- Spouse contributions: Contributing to a low-income spouse's super fund (assessable income under $37,000) earns you an offset of 18% on contributions up to $3,000 = $540 tax offset. Available regardless of whether you claim the co-contribution. A $3,000 NCC to a spouse's fund costs $2,460 after the $540 offset - an effective 18% immediate return on the contribution
Total Super Balance (TSB): The Gatekeeper for Multiple Strategies
Your Total Super Balance (TSB) at 30 June of the prior financial year is the key threshold that determines access to multiple super strategies. Getting TSB calculations wrong leads to excess contributions and unexpected tax bills.
- What TSB includes: The accumulation phase value of all your super accounts (including SMSFs), plus the retirement phase (pension account) value at the Transfer Balance Account level. If you have both a pension phase account and an accumulation account, both are included. Rollover amounts in transit between funds at 30 June are included
- TSB thresholds and their consequences:
- Below $500,000: eligible for carry-forward concessional contributions (unused CC cap from prior years)
- $500,000-$1.66M: normal NCC cap applies ($120,000 or $360,000 via bring-forward)
- $1.66M-$1.78M: partial bring-forward only - 2-year ($240,000) bring-forward available, not 3-year
- $1.78M-$1.9M: standard $120,000 NCC cap only - no bring-forward
- Above $1.9M: NCC cap is $0 - no NCCs permitted
- Why TSB matters for SMSF members: An SMSF member with property and shares may have a TSB above $1.9M without realising it - particularly after property appreciation. Inadvertently making NCCs when TSB exceeds $1.9M triggers excess NCC tax (the NCC is returned, plus a 47% tax on notional earnings). Review TSB annually before making any NCC
- TSB and the government co-contribution: The government co-contribution phases out above $43,445 and is nil above $58,445 - this threshold is income-based, not TSB-based. However, a TSB above $1.9M also prevents NCCs, which are required to trigger the co-contribution
- TSB calculation timing: TSB is measured at 30 June of the prior financial year - not the current year. A contribution strategy for the 2024-25 financial year uses the TSB at 30 June 2024. This gives a clear annual snapshot - but requires checking after 30 June and before making NCCs in the new financial year
The 5-Year Carry-Forward Concessional Contributions Rule
The carry-forward rule allows you to 'catch up' unused concessional contribution cap space from prior years - particularly valuable for people who had career breaks, worked part-time, or had lower income in earlier years.
- How carry-forward works: If you did not use your full $27,500-$30,000 CC cap in a prior year (from 2018-19 onwards), the unused amount carries forward for up to 5 years. In a higher-income year, you can make larger concessional contributions using the accumulated unused cap space - reducing taxable income significantly
- Eligibility requirement: TSB must be below $500,000 at 30 June of the prior financial year to use carry-forward. This prevents high-balance super members from using the rule - it's specifically designed for those with lower balances catching up
- Worked example: A nurse who took parental leave for 2 years (2022-23 and 2023-24), earning $40,000/year with $18,000 in employer SG: unused CC cap = $27,500 - $18,000 = $9,500 in each year = $19,000 carry-forward available. In 2024-25 (back to full-time, $90,000 salary, $10,350 employer SG), she can contribute $10,350 + $19,350 in salary sacrifice (using $30,000 current cap + $19,000 carried-forward cap = up to $49,000 in CCs total). This dramatically reduces her taxable income in her high-income return year
- 5-year rolling window: Carry-forward unused cap accumulates from 2018-19. Unused amounts from 5 years ago drop off - a 2018-19 unused amount would drop off after 2023-24. Use the ATO's myGov super tab to check your current carry-forward balance - it's displayed automatically once you link your super fund
- Interaction with salary sacrifice: Salary sacrifice into the carry-forward cap works the same way as regular salary sacrifice - contributions are taxed at 15% (or 30% for Division 293 earners). The tax saving at 32.5% marginal rate remains $17.50 per $100 of carry-forward contribution - making large catch-up contributions particularly tax-efficient in a high-income year after a career break
The 3-Year Bring-Forward Non-Concessional Contributions Rule
The bring-forward rule allows eligible Australians to contribute up to 3 years' worth of non-concessional contributions in a single year - enabling large lump sums to enter super at once. Critical for those inheriting money, receiving property settlements, or selling a business.
- How bring-forward works: If you are under 75 years of age and your TSB is below $1.66M at 30 June of the prior year, you can contribute up to $360,000 (3 × $120,000) in a single year. Once triggered, the bring-forward period is locked in - you cannot make further NCCs in the following 2 years (you've already used those years' caps)
- Triggering the bring-forward: The bring-forward is automatically triggered in any year you contribute more than $120,000 as NCCs. Deliberately triggering it requires no special application - just contribute more than the annual cap. The ATO tracks whether the bring-forward has been used in your super history
- TSB-based bring-forward limits:
- TSB below $1.66M: full 3-year $360,000 bring-forward
- TSB $1.66M-$1.78M: 2-year $240,000 bring-forward
- TSB $1.78M-$1.9M: 1-year $120,000 cap only
- TSB above $1.9M: $0 NCC cap - no bring-forward
- Common use cases: Receiving a large inheritance and wanting to shelter it in the concessional tax environment of super; cashing out investment property and directing proceeds to super before retirement; business owners selling assets and making lump sum super contributions in the final working years; couples where one partner has a much lower TSB and can use a full bring-forward to equalise balances
- Downsizer contributions are separate: The downsizer contribution (up to $300,000 per person from the sale of a principal residence held for 10+ years, available from age 55) is entirely separate from the NCC cap and bring-forward rule. A downsizer contribution does not count toward the NCC cap - it has its own limits and rules. This means a couple can contribute $720,000 via bring-forward ($360,000 each) PLUS $600,000 via downsizer ($300,000 each) - potentially $1.32M into super from a home sale in a single year
Excess Contributions Tax: What Happens When You Breach a Cap
Breaching either the CC or NCC cap triggers an ATO assessment. Understanding the consequences - and how to correct the breach - prevents permanent financial damage.
- Excess concessional contributions: If you exceed the $30,000 CC cap, the excess is included in your assessable income and taxed at your marginal rate (with a 15% offset for the tax already paid in the fund). The excess remains in the fund - it doesn't need to be withdrawn. The ATO issues a determination allowing you to elect to release the excess from your fund to pay the tax
- Excess non-concessional contributions: If you exceed the NCC cap, the ATO issues a determination. You have 60 days to elect to release the excess plus 85% of associated earnings from super. If you don't elect to release: a 47% tax on the excess is applied and the excess stays in the fund. Releasing is almost always the correct response - paying 47% on money that cannot be withdrawn is a poor outcome
- Common breach scenarios: Salary sacrifice set too high without monitoring SG contributions (breaching CC cap); large personal NCCs without checking TSB first (potentially $0 NCC cap if TSB above $1.9M); forgetting that employer SG counts toward the CC cap when making large salary sacrifice contributions; triggering bring-forward in year 1, then making NCCs in years 2 or 3 forgetting the bring-forward lock-out period
- ATO discretion for genuine mistakes: The ATO has discretion to disregard or reallocate excess contributions resulting from 'genuine mistakes' - for example, two SG payments falling in the same financial year due to timing, or administrative errors by employers. Apply for discretion promptly with full documentation if you believe a breach was genuinely inadvertent
- Prevention is far better than cure: Check your CC position quarterly via myGov (ATO super tab shows year-to-date contributions). Before making NCCs, verify TSB at 30 June of the prior year. If using salary sacrifice, update the amount annually when SG increases - the SG increase from 11% to 11.5% in July 2024 pushed many salary sacrifice arrangements into excess. Review contribution arrangements at the start of each financial year
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