Superannuation Contribution Caps: Concessional and Carry-Forward Strategies

Contributing to superannuation remains Australia's most tax-effective way to build retirement wealth. Contributions are split into two categories — concessional (before-tax) and non-concessional (after-tax) — each with its own annual cap, eligibility rules, and tax treatment. From 1 July 2026, both caps increased following indexation, and high-income earners continue to face the Division 293 surcharge. Understanding which cap applies to you is the difference between a tax-effective strategy and an excess that attracts extra tax.

Concessional contributions: the $32,500 cap

Concessional contributions include the Super Guarantee (SG) paid by your employer, salary-sacrifice arrangements, and personal deductible contributions by self-employed or salaried individuals. From 1 July 2026, the general concessional cap is $32,500 per financial year (up from $30,000). These contributions are taxed at 15% inside the fund — far below the top personal marginal rate of 45%.

Non-concessional contributions: the $130,000 cap

Non-concessional contributions are made from after-tax money — you receive no personal deduction, but they are not taxed on entry to the fund. From 1 July 2026, the annual non-concessional cap is $130,000. Under the bring-forward rule, eligible individuals under 65 can contribute up to three years' cap at once ($390,000) without triggering the bring-forward counting that determines eligibility. Availability depends on your total super balance at the previous 30 June — those over the cap may not be permitted to contribute at all.

Division 293 tax for high earners

Individuals whose combined income and concessional super contributions exceed $250,000 pay an additional 15% Division 293 tax on the concessional contributions above the threshold, bringing the total tax on those contributions to 30%. The threshold itself has not been indexed since introduction, so each year more earners fall within its scope. Even paying Division 293, contributing to super remains favourable against the 47% top personal rate — but the calculation and timing must be planned in advance.

Excess contributions and release authorities

Contributions over a cap create an excess that is taxed at your marginal rate (for concessional) or counts against future non-concessional space, and may be released from the fund under an ATO release authority. The excess can be withdrawn, or left in the fund and taxed — each with different consequences for your caps and your transfer balance position when you retire. Avoiding the excess altogether, by modelling contributions against the cap before they are made, is far cheaper than fixing it afterward.

Timing contributions to capture the benefit

Because SG counts toward the concessional cap, an employee salary-sacrificing must first subtract expected employer contributions from $32,500 before setting a sacrifice amount. Funds also take several business days to clear, so a contribution intended for 30 June must be transferred in time to reach the fund before the year ends. Freedom Taxation models your caps each year against projected income and employer contributions, confirms eligibility for carry-forward, and schedules transfers to ensure each dollar lands in the correct financial year.