What are they and why do they matter?
What are superannuation contribution caps?
Super caps are the limits to annual super contributions. There are two types of cap:
- a maximum before-tax contribution limit, and
- a limit on after-tax contributions.
Before-tax contributions include employer contributions (the Super Guarantee or SG) and salary sacrifice.
What are the super contribution caps for 2019-20?
The current caps are:
- Before-tax super cap: $25,000 (including employer contributions)
- After-tax super cap: $100,000
The ATO has more information on contribution caps.
Is it the same as the maximum super contribution base?
No, they’re different things.
Under the SG, compulsory superannuation is set at a percentage of each employee’s regular income – usually at least 9.5% of an employees’ ordinary time earnings. To prevent businesses from having to make large super contributions for those employees on very high incomes, there is a maximum recognised income to be used when calculating super.
In 2019-20, once an employee’s income reaches $221,080 per year, then the super is calculated based on that maximum, it does not keep rising. That means that the most a business would normally be expected to contribute in super for a single employee is around $21,003 in 2019-20.
What if contributions exceed the cap?
Employees can withdraw excess contributions to super, although they have to pay income tax on any earnings from the excess contributions.
Getting super calculations right isn’t always straightforward, but our business specialists can help make it a bit easier. So if you have any queries, call us on 1800 222 071 between 8am and 8pm (AEST/AEDT) weekdays or get in touch with the Account Manager for your state.
Who is TWUSUPER?
TWUSUPER is the Industry SuperFund for people in transport and logistics - the people who keep Australia moving. We exist only to benefit our members, and have been helping employers manage employee super since 1984. We currently manage over $5 billion.
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