What To Do If You Exceed Your Concessional Super Contributions Cap

Superannuation is a great way to save for retirement, but sometimes you might contribute more than the annual concessional (before-tax) cap. The cap is currently $30,000 and includes employer contributions and salary sacrifice.  When you submit your tax return, If an excess occurs,  the Australian Taxation Office (ATO) will send you a letter called an “excess concessional contributions determination.” This letter gives you two choices for handling the excess amount:

Your Two Options If You Exceed Your Concessional Super Contributions Cap

Option 1: Leave the Excess in Super

• If you do nothing, the excess amount stays in your super fund.

• The excess will count towards your non-concessional (after-tax) contributions cap. You should note this can sometimes cause you to exceed your non-concessional cap, which may lead to extra tax and paperwork.

  
  

Option 2: Release Up to 85% of the Excess

• You can choose to withdraw up to 85% of the excess from your super.

• The released amount does not count towards your non-concessional cap.

• This option can help you avoid breaching your non-concessional cap and may be better for estate planning.

  
  

Tax Consequences

No matter which option you choose, the tax treatment is similar:

• The excess amount is added to your taxable income for the year and taxed at your marginal rate.

• You get a 15% tax offset to compensate for tax already paid by your super fund.

  
  

Impact on Your Super and Estate Planning

Leaving the excess in super 

Means it counts towards your non-concessional cap and stays in the taxable component of your super. This could mean more tax for non-dependent beneficiaries (like adult children) if your super is paid out after your death. This is a complex area and we suggest you seek advice to understand the impact on your personal situation.

Releasing the excess 

Allows you to potentially re-contribute it as a non-concessional contribution later, which would then be counted in the tax-free component of your super. This can reduce tax for your beneficiaries.

How to Make Your Choice

You have 60 days from the date of the ATO’s determination letter to make your decision. If you choose to release the excess:

• You can do it online via myGov (linked to ATO online services) or by mailing a paper form to the ATO.

• The ATO will instruct your super fund to release the money, which will first be used to pay any outstanding tax or government debts, with the remainder paid to you.

  
  

It’s important you action your decision within 60 days.  If you are unsure of the right option for you, speak to your accountant or financial adviser as soon as possible.

General Advice Warning - This communication has been prepared on a general advice basis only. The information has not been prepared to take into account your specific objectives, needs and financial situation. The information may not be appropriate to your individual needs and you should seek advice from your financial or tax adviser before making any investment decisions.