Super Guarantee

Super Guarantee: Thresholds, caps and limitations

Employers are required under Superannuation Guarantee legislation, to make super contributions on behalf of their employees, and at the correct rate. Anyone with a super account can also make voluntary contributions to their account.

There are some limits and terminology to be aware of:

Concessional (salary sacrifice) contributions

Concessional contributions

This means the before-tax contributions made to a super fund – these are taxed at a lower (i.e. concessional) rate of tax. The tax rate depends on your income plus your before-tax super contributions. Generally, if your income plus super contributions is:

under $250,000 p.a. you pay 15% tax;
$250,000 p.a. or more you pay 30% tax.

Concessional contributions cap

There is a limit to the amount you can contribute to super from your before-tax income in order to benefit from the concessional tax rate.

The cap – which includes contributions made by your employer under the Super Guarantee scheme – is set at $30,000 p.a. (2024/25 figure). This figure is indexed each year in line with the average weekly ordinary time earnings, rounded down to the nearest $2,500.

If total after-tax contributions exceed the cap, you will be required to pay a higher tax rate on the excess amount and you may have to pay an excess charge as well.

3 steps to salary sacrifice

See how easy it could be to take advantage of salary sacrifice tax savings.

Non-concessional (after tax) contributions

Non-concessional contributions

Non-concessional means contributions made to a superannuation fund from after-tax income. These contributions are not taxed in the super fund.

You may be able to get a tax deduction for non-concessional contributions.

Non-concessional contributions cap

Even though after-tax voluntary contributions have been taxed at your normal rate of income tax, there are still limits to the amount you can contribute to your super. The cap is set at $120,000 p.a. (2024/25 figure).

If your total after-tax contributions exceed the cap, you will be required to pay a higher rate of tax on the excess amount and you have to pay a charge as well.

Note:

Your non-concessional (after-tax) cap will be zero for a financial year if you have a superannuation balance greater than or equal to the general transfer balance cap ($1.9M in 2024/25) at 30 June of the previous financial year.
If you are aged 75 years or over, you must meet the At Work Test.
If you are under 75 years (prior to 2022-23 the age was under 67 years; and for 2020–21 financial year and prior years the age was under 65 years) and have a super balance of less than $1.66 million on 1 July of the financial year, you're able to bring forward the next two years of after-tax contributions and make a lump sum contribution of $360,000 in the one financial year. For example, if you make a $360,000 contribution during the 2024/25 financial year you won't be able to make any further after-tax contributions until the 2027/28 financial year.

How to make non-concessional contributions

See the 4 steps to making an after-tax contribution and claiming a deduction on your tax.

Maximum Superannuation Contribution Base

This is the sum, set by the Federal Government each year, which is the maximum limit on an employee's earnings base for each quarter of a financial year.

For 2024/25 the maximum superannuation contribution base is $65,070 per quarter (equivalent to $260,280 for the year).

An employer does not have to pay super guarantee for the part of earnings above this limit.

This means that the maximum super guarantee amount an employer is required to contribute is the equivalent of 11.5% of $65,070 per quarter, which works out to be a contribution of $7,483.05 per quarter.

Super Transfer Balance Cap

The transfer balance cap is a rule that limits how much superannuation you can transfer from your accumulation phase to the tax-free retirement phrase.

Broadly, if you retire with a super balance greater than the general transfer balance cap (currently $1.9 million) then the excess amount will not enjoy the same tax-free earnings as normal super income streams. The cap includes all your retirement accounts if you have more than one. The transfer balance cap increased to $1.9 million on 1 July 2023 for those people that started their retirement income stream on or after 1 July 2023.

From that date the transfer balance cap will vary for each person from $1.6 to $1.9 million. If you exceed the transfer balance cap while you are still working you will not be eligible for the government co-contribution, the tax offset for spouse contributions and the after-tax contributions cap and the two or three year bring-forward period.