Exceeding 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 (less a 15% tax offset).  (Note: An ECC charge is no longer applied after 1 July 2021.)

Should an individual exceed their non-concessional contributions cap (including making use of the bring forward rules, if applicable) the excess amount may be taxed at the maximum marginal individual tax rate – inclusive of Medicare levy. (Currently this is 47% for the 2022 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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