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Be wary of Excess Super Contributions tax

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Warning about excess super contributions

Excess super contributions: did you know you can be penalised for contributing too much into your superannuation?

There is a super contributions cap in place and a penalty tax if you exceed it. If you want to know more about the super contributions cap then read on…

The impact of contributing too much super

Put simply, the excess superannuation contributions tax harshly penalise those who exceed the contributions cap.

In fact, the excess contributions tax levies a tax of 46.5% on any super contributions above your cap which can be a shock when you don’t expect it.

It’s important to note that you the individual are personally liable for the tax, not your superannuation fund as some may expect. Speak to your accountant or the team at CVW Accounting for details where this tax can be paid from your superannuation fund.

If you use the ‘bring forward option’ and make three-years worth of contributions in one year, make sure not to  miscalculate your contributions because the resulting contributions tax could be devastating.

Government changes to superannuation contributions

Firstly, the Government introduced changes that allow individuals who breach the concessional cap by up to $10,000 to;

  • have these excess amounts refunded to them and
  • include excess amounts in their personal assessable income, rather than the superannuation fund

This measure is only available for first time breaches i.e. only one breach per lifetime.

The measure only applies to contributions made from 1 July 2011 and as a result this will reduce the level of excess contributions taxed to 46.5% or 93%.

What to keep in mind about super contributions

Secondly, avoid the excess contribution tax by being aware of;

  • contributions paid to your fund on your behalf,
  • il-timed payments
  • implications of salary sacrifice agreements on your super
  • all contributions

What is the definition of contribution?

The definition of a contribution is wide. Here are a couple of examples;

Life insurance premiums held within your fund paid for by your employer count as a contribution.

Personally paying the fund’s accounting fees is considered a contribution.

It’s worthwhile to find out what your concessional and non-concessional contribution limits are to ensure you can avoid the excess contributions tax.

Keep track of contributions made to your super fund. It is also worthwhile to allow a buffer for unexpected contributions or miscalculations.

Any questions about excess super contributions, contact us for a free, no-obligation chat.


This CVW Accounting blog was first published in November 2012 and then updated in March 2019,  August 2020 and June 2021.


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