Concessional contributions come from income that has not yet been taxed. They are also called ‘before tax’ contributions. Once the concessional contributions are in your super fund, they are taxed at a rate of 15%. You may need to pay extra tax if you exceed the concessional contribution cap. Learn more about concessional contributions here.
If you exceed your concessional contributions cap, it means that:
- the excess concessional contributions amount is included in your assessable income
- this amount will be taxed at your marginal tax rate.
The ATO will apply a 15% tax offset to account for the contributions tax already paid by your super fund.
If you exceed your concessional contributions caps, you may elect to withdraw up to 85% of your excess concessional contributions from your super fund to help pay your income tax liability.
Your options if you exceed the cap
When you receive a determination and Notice of Assessment (NOA) or amended NOA, you have 60 days to make an election (choice). You can choose to:
- leave the excess concessional contributions in super – you need to pay any extra tax and the Excess Concessional Contributions charge out of your own money. If you choose to do nothing your excess concessional contributions will be counted towards your non-concessional contributions cap.
- Elect to release – You can release up to 85% of your excess concessional contributions from your superfund to help pay any additional tax and the ECC charge.