Tax and your super
Learn about how your super is taxed, super contributions caps and bring-forward arrangements.
Each financial year the ATO reviews a number of important superannuation caps, rates and thresholds.
This summary is not a complete explanation of the affected caps. Additional information may be relevant depending on your personal circumstances. For more information about any of these caps, please visit the Australian Taxation Office (ATO)’s website.
From 1 July 2021, the following caps (and more) increased:
|General concessional contribution cap||$25,000||$27,500|
|General non-concessional contribution cap||$100,000||$110,000|
|Low rate cap for super lump sums||$215,000||$225,000|
|Untaxed plan cap for super lump sums||$1.565 million||$1.615 million|
|General transfer balance cap||$1.6 million||$1.7 million|
|Defined benefit income cap||$100,000||$106,250|
Frequently asked questions
What is the concessional contributions cap?
Concessional contributions are paid from a before-tax source and will usually have 15% contributions tax withheld on receipt. They include*:
- Employer contributions such as Superannuation Guarantee (SG) payments and productivity contributions
- Notional contributions such as defined benefit contributions (DBC)^
- Salary sacrifice contributions
- Personal contributions that are claimed as a tax deduction
- Any employer-share of insurance premiums
*Not all contributions will apply to your scheme
^DBC is a notional amount that represents your employer benefit accrual for the purpose of this cap. It is determined by a formula – it’s not the same as the employer component of your benefit shown on your annual statement. DBC includes any productivity contributions paid by your employer.
If your DBC exceeds the concessional contributions cap, you usually* won’t incur a penalty, but any other concessional contributions in addition to you DBC will be taxed at your marginal rate, and count towards your non-concessional contributions cap.
*You may incur a penalty in this scenario if your membership commenced after 12 May 2009.
The concessional contributions cap increased to $27,500 for the 2021-22 financial year.
What does this mean for the carry-forward provision?
If you have a Total Super Balance of less than $500,000, carry-forward rules allow you to make extra concessional contributions above the general concessional contributions cap, without incurring additional tax. You can do this by accessing unused concessional contribution cap amounts from previous years. Unused cap amounts are available for a maximum of five years and will expire after that time.
If you’re eligible, the amount you can contribute will depend on how much of your prior years’ caps you have used.
What is the non-concessional contributions cap?
Non-concessional contributions are those paid from an after-tax source as long as you haven’t claimed a tax deduction. Tax is not withheld when these contributions are received by your super fund. Non-concessional contributions include*:
- Member contributions
- Employee share of any insurance premiums
- Other after-tax / personal contributions
*Not all contribution types will apply to your scheme
Depending on your scheme, if you exceed your non-concessional contributions cap, you may be able to choose how your excess contributions are treated. If you’re a member of a defined benefit scheme, you’ll be required to leave your excess contributions in the fund. Otherwise, you’ll generally have the option to release the excess contributions from super (you may still pay additional tax on the associated earnings), or leave the contributions in the fund and pay excess contributions tax.
The non-concessional contributions cap increased to $110,000 for the 2021-22 financial year.
What does this mean for the bring-forward arrangement?
If you’re under age 67 on 1 July in any year, you may be able to make non-concessional contributions up to three times the applicable cap in a single year. This will give you access to future years’ caps. The amount you can bring forward depends on your Total Super Balance on the day before you make the contributions that trigger the bring-forward rule. Please refer to the ATO website for a detailed breakdown of how the bring-forward arrangement works.
If you’re eligible, you may be eligible to contribute up to $330,000^ in the 2021-22 financial year.
^The maximum amount you can contribute will depend on when the bring-forward arrangements begin to apply.
What is the low rate cap (lump sums)?
This cap limits the taxable taxed and taxable untaxed components of a super lump sum that can be taxed at a concessional rate. This cap applies to members who have reached their preservation age, but are not yet 60.
The low rate cap increased to $225,000 for the 2021-22 financial year.
What is the untaxed plan cap (lump sums)?
This cap limits the taxable untaxed component of a super lump sum that can be taxed at a reduced rate. This cap applies to all members who are claiming a lump sum that includes a taxable untaxed component.
The untaxed plan cap amount increased to $1,615,000 for the 2021-22 financial year.
What is the general transfer balance cap?
The general transfer balance cap is a lifetime limit on the amount of super that you can transfer into retirement phase income streams. Usually, if you exceed this cap, you’ll be required to commute any excess to a lump sum benefit. However, capped defined benefit income streams are excluded from this commutation requirement. Instead, the concessional tax treatment applied to your pension will be restricted from age 60.
Indexation of the general transfer balance cap also means that your personal transfer balance cap may change. This applies to members who have already transferred some of their super into a retirement phase income stream. Find out more about the general or personal transfer balance cap.
The general transfer balance cap increased to $1.7 million for the 2021-22 financial year.
What is the defined benefit income cap?
The defined benefit income cap restricts the concessional tax treatment applied to capped defined benefit income streams that exceed the cap. This cap won’t affect the amount of your pension entitlement. However, your concessional tax treatment will be restricted from age 60. For more information about the defined benefit income cap, visit our Transfer Balance Cap page.
The defined benefit income cap increased to $106,250 for the 2021-22 financial year.
What is the total super balance?
Your total super balance is a way to value all of your super interests on a given day (usually 30 June each year). It may not be the same as your super fund account balances, as it includes figures that don’t form part of your account balance. It includes the accumulation phase value and retirement phase value of your super interests, and any rollovers that are in transit on 30 June.
Your total super balance is used to determine whether you are eligible for several super-related measures in the following financial year such as the carry-forward rules and bring forward arrangements.
Please note: your benefit accrual isn’t impacted if your total super balance exceeds the general transfer balance cap. However you should consider the effect on your benefit before changing your contribution rate.
If you’ve made a personal contribution to your accumulation account, you may be able to claim a tax deduction for any personal super contributions on your next income tax return.Find out more
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