Super Contribution Cap & Division 293 Tax

Author's note: this post is a follow up to our previous post titled Salary Sacrifice vs Personal Super Contribution. The previous post can be accessed through this link: https://wgtaxation.wixsite.com/wgtaxation/post/salary-sacrifice-vs-personal-super-contributions-how-to-save-on-tax-while-growing-your-super

(Information below is accurate as of 10th May 2025. However, regulations may be subject to change.)

There are two tax rules that can impact how much superannuation you can contribute and how much tax you pay:

1. The concessional contributions cap, and

2. The Division 293 tax.

   
   

Understanding these rules can help you avoid unwanted tax surprises.

Concessional Contributions Cap

You and your employer can only contribute up to a certain amount of pre-tax money into your super fund for each financial year. If you exceed this limit, you may have to pay extra tax. These are called concessional contributions, and they include:

• Employer contributions (such as Super Guarantee payments)

• Salary sacrifice arrangements

• Personal contributions claimed as a tax deduction

  
  

For the 2024–2025 financial year, the cap is $30,000 per person. All concessional contributions count toward this limit — not just the ones you choose to make. So if your employer contributes $30,000 or more on your behalf, you can’t add any extra without exceeding the cap.

Going Over the Cap

You can exceed the cap only if you’re eligible to use the carry-forward rule. This rule allows you to access unused cap amounts from the previous five years, as long as your total super balance was below $500,000 on 30 June of the previous financial year.

This is a great way to catch up on contributions if you haven’t used your full cap in the past, but it must be managed carefully to stay within the rules.

If your concessional contributions exceed the cap and you’re not eligible to carry forward unused amounts:

• The excess contributions are added to your taxable income

• You may pay extra tax, including an Excess Concessional Contributions (ECC) charge.

This is why it’s so important to keep track of all super contributions, including those made by your employer.

Division 293 Tax

If your income is on the higher side, Division 293 may apply to you.

Division 293 is an additional tax of 15% on your concessional contributions — but only if your income plus concessional contributions is more than $250,000 in a financial year.

This means your concessional contributions could be taxed at 30% instead of the usual 15%.

Example:

If your income is $240,000 and your employer contributes $20,000 into your super, your total is $260,000. The $10,000 above the $250,000 threshold will be taxed at an extra 15%, under Division 293.

Conclusion

Understanding these contribution rules can help you maximise your super without getting caught out by tax. Whether you're a business owner, employee, or high-income earner, it's worth reviewing your super strategy each year — especially if your income or contributions are close to the thresholds.

Need Help?

Reach out to your tax accountant or financial adviser. We're here to help if needed. Always consult with a qualified professional before making important decisions.

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