HomeSMSF NewsExceeding contribution caps – how is it taxed?

Exceeding contribution caps – how is it taxed?

Should an individual exceed their concessional contribution cap, the excess contributions are included in their income tax return and taxed at the marginal rate of the individual.  (Note: An ECC charge is also applied.)

Should an individual exceed their non-concessional contributions cap (including making use of the bring forward rules, if applicable) the excess amount is taxed at the maximum marginal individual tax rate – inclusive of Medicare levy and temporary budget repair levy, if applicable. (Currently this is 49% for the 2015 year and later)

Note: Unless you choose to withdraw your excess concessional contribution from your superannuation fund, the excess also becomes a non-concessional contribution.  If this new non-concessional contribution takes you over the non-concessional contribution cap, your contribution could be taxed twice.  To avoid this – be aware of the contribution caps and how much you are contributing to superannuation.

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Diana Morris founded The SMSF Accountant in 2010. Diana is a member of the Institute of Chartered Accountants, holds a current public practice certificate, and is a registered tax agent. Diana has completed a Bachelor of Commerce degree and a Graduate Diploma of Chartered Accounting.