Do you know these contribution rules (Part 1)?

Introduction

This article is the first part in a series that covers the key aspects of super contributions.

To grow your super with contributions and derive maximum benefits, it is important to understand the opportunities and traps involved. A robust contribution strategy should consider, among other things, the technical rules, contribution caps and the treatment of excess contributions.

Unless properly considered and implemented, unnecessary tax may arise especially for those that exceed their caps.

What are contributions?

The word ‘contribution’ is not expressly defined in the Superannuation Industry (Supervision) Act 1993 (Cth) or the Income Tax Assessment Act 1997 (Cth) (ITAA 1997).

References to legislation below are references to the ITAA 1997 unless stated otherwise.

In paragraph 4 of TR 2010/1, the Australian Taxation Office (ATO) provides guidance on what it considers a ‘contribution’ to be:

In the superannuation context, a contribution is anything of value that increases the capital of a superannuation fund provided by a person whose purpose is to benefit one or more particular members of the fund or all of the members in general.

As such, in the ATO’s view, for a contribution to be made, the following two questions must be answered positively:

• Was there an increase in the capital of a superannuation fund?
• Was the purpose to benefit any one or more of the fund’s members? The purpose is generally taken to be that reflected in the deed of the fund.

Types of contributions

Contributions can be broadly divided into two categories based on their tax treatment: concessional contributions (CCs) and non-concessional contributions (NCCs).

Concessional contributions

Broadly, CCs are contributions that are included in the assessable income of a fund. CCs are generally subject to a 15% contributions tax in the fund as they are tax deductible. (Note that an additional 15% tax can be imposed on CCs under Division 293 that will be covered in a later article on contributions.)

The most common forms of CCs are:

• Contributions made by an employer to a fund on behalf of an employee.
• Contributions made by members who claim a personal deduction for them supported by a valid notice that is acknowledged by the fund trustee in accordance with s 290-170 (eligible personal contributions). A contribution by a member to the extent it is not claimed as a deduction is typically an NCC.

Generally, employers are required to contribute the minimum level of superannuation guarantee (SG) support for each employee (currently 12%) to avoid a shortfall under the Superannuation Guarantee (Administration) Act 1992 (Cth).

A self-employed person is not required to contribute to super. However, if they are employed via their own company or trust and are paid salary or wages, the company or trustee may need to contribute super.

CCs form part of the taxable component of a member’s interest in a fund.

Non-concessional contributions

Broadly, NCCs are contributions that are not included in the assessable income of a superannuation fund. The most common forms of NCCs are:

• Contributions to a fund made by members who do not claim a personal deduction for them. These are colloquially referred to as ‘after-tax contributions’.
• Excess CCs where the member, instead of releasing the excess out of the fund, elects to keep the amount in super as an NCC. Excess CCs are assessable and subject to the member’s marginal tax rate and Medicare levy, subject to a 15% tax offset.

Since NCCs form part of the tax free component of a member’s interest in a fund, the tax free component can, upon attaining a condition of release, be paid to a member tax free (without any tax).

Concessional contributions caps

There are limits or caps in each financial year (FY) that apply to the amount of CCs and NCCs that a member can make to a superannuation fund. These caps are subject to indexation.

CC caps

The table below sets out the general CC cap amounts for previous years:

* From 1 July 2026, the general CC cap will increase to $32,500 with indexation.

For example, in FY2026 a member can have up to $30,000 of CCs contributed without exceeding their CC cap. However, a higher CC cap may apply if the member has a carry forward unused CC cap amount, as discussed below.

Carrying forward unused CC caps

A person may be able to contribute more to a super fund than the general CC cap in a FY, by carrying forward unused cap amounts from the previous five FYs.

They are eligible to do so in a particular FY if they have a total super balance (TSB) of less than $500,000 on 30 June of the previous FY. Only unused CC cap amounts from the prior five FYs can be carried forward. Unused CC cap amounts, if not used in time, expire after five FYs. Thus, in respect of FY2026, only unused CCs from FY2021 onwards can be used.

For example, at the end of 30 June 2025, Ben’s TSB was $300,000. In the past 5 years, Ben has only ever received $3,000 of CCs to his fund each year. For FY2026, Ben has a carry forward of unused CC cap amounts from the past five years, ie, from FY2020 to FY2025 of $122,500 calculated as follows:

Ben can therefore increase his CC cap in FY2026 to a maximum of $152,500 (ie, general cap of $30,000 for FY2026 plus total carried forward amount of $122,500).

His unused CC cap amounts from 1 July 2018 (when the carry forward CC rules could first be applied) to 30 June 2020 have expired.

Note, however, that a member cannot claim a tax loss for claiming contributions and can only claim against their net assessable income, without creating a tax loss.

Age restrictions on personal deductible CCs

From the day a member turns 67 until 28 days after the end of the month in which a member turns 75, the member will generally have to meet the gainful employment test before they can claim a deduction for a personal or member contribution. Under s 290-165(1A)(a), the test requires that the member:

‘must have been gainfully employed for at least 40 hours in any period of 30 consecutive days during the income year in which the contribution was made’.

After 28 days from the end of the month in which a member turns 75, the member will no longer be able to claim a deduction for personal CCs.

Conclusions

As is evident from this article, the amount of contributions that a member can make to their superannuation fund is restricted by caps and other complex rules. Familiarity with these rules ensures that members can maximise their planning opportunities and avoid the downsides of excess contributions, which may result in adverse tax consequences.

Stay tuned for Part 2 in this multi-part series, which covers the NCC caps, as well as what happens when a member exceeds their CC and NCC caps.

Naturally, DBA Lawyers would be please to assist.

Related articles

• Update on recent changes to the contribution rules
• When is a contribution made?
• Downsizer contributions –– the basics and some key tips and traps

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This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional. The above does not constitute financial product advice. Financial product advice can only be obtained from a licenced financial adviser under the Corporations Act 2001 (Cth).

Note: DBA Lawyers presents monthly online SMSF training. For more details or to register, visit www.dbanetwork.com.au or call 03 9092 9400.

For more information regarding how DBA Lawyers can assist in your SMSF practice, visit www.dbalawyers.com.au.

By Daniel Butler, Director ([email protected]) and Max Zhang, Lawyer ([email protected])

DBA LAWYERS

8 May 2026