What Happens If You Exceed Concessional Contributions?

It happens more often than people think.

You plan a personal deductible contribution. Your employer pays Super Guarantee later than expected. Or you change jobs and two employers overlap for a while.

Then you realise your concessional contributions have gone over the cap.

The ATO calls this excess concessional contributions, often shortened to ECC.

This guide explains what the ATO does next, how the excess is taxed, and what your options are.

Key takeaways

• If you exceed the concessional contributions cap, the ATO includes the excess in your assessable income.
• The excess is taxed at your marginal rate, with a 15% tax offset to account for contributions tax already paid by your fund.
• If you are eligible for catch up concessional contributions, the ATO applies your unused cap amounts automatically once you exceed the current year cap, oldest year first.
• You can generally elect to release up to 85% of the excess amount from super to help pay the tax.
• If you do not release the excess, it can count toward your non concessional contributions cap.
• If you are trying to avoid this in the first place, start with: Catch Up Concessional Contributions (Australia)

First, what counts towards the concessional cap?

The concessional cap includes:

• Employer Super Guarantee
• Salary sacrifice
• Personal contributions you claim as a tax deduction

This is why people accidentally go over. They track their personal contribution, but they forget the employer side.

The ATO’s cap rules and tracking guidance are here: ATO: Concessional contributions cap

Step 1: Check whether carry forward amounts can absorb the excess

Before you panic, check whether carry forward concessional contributions apply.

Catch up concessional contributions are also called carry forward concessional contributions. If you are eligible and you exceed the current year concessional cap, the ATO applies your available unused cap amounts automatically.

Two key points:

• Your current year cap is used first.
• Once you exceed it, the ATO applies unused amounts starting with the oldest available year.

Eligibility depends on your total super balance being under $500,000 at 30 June of the previous financial year, and having unused amounts available from up to five prior years.

If you need a refresher, start here: Catch Up Concessional Contributions (Australia)

If you want to check your unused amounts in myGov: How to Check Unused Concessional Contributions in myGov

If you are unsure how expiry works: Catch Up Concessional Contributions Expiry and the Five Year Rule

Step 2: What happens if you still have excess concessional contributions?

If you still have excess concessional contributions after applying any available unused amounts, the ATO treats the excess in a specific way.

The excess is added to your taxable income

The excess concessional contributions amount is included in your assessable income.

The excess is taxed at your marginal rate, with a 15% tax offset

The ATO taxes the excess at your marginal tax rate, then reduces that tax by a 15% offset. That offset reflects the contributions tax already paid inside your super fund.

In plain English, you do not pay contributions tax and then pay full marginal tax on top without relief. The offset is the relief.

Flow on effects

Once the excess is included in your income, it may affect other things tied to taxable income, such as Medicare levy, Centrelink benefits, and child support.

Step 3: You will receive an ATO determination

If you have excess concessional contributions, the ATO sends you an excess concessional contributions determination letter explaining what happened and what you can do next.

You also receive an income tax notice of assessment that shows:

• the excess included in your assessable income
• the 15% tax offset amount

This process relies on information reported by super funds and your tax return. Sometimes, a fund reports late and the ATO amends your return afterwards.

Step 4: Releasing up to 85% of the excess from super

You can generally elect to release up to 85% of the excess concessional contributions from your super fund to help pay the additional tax.

A few points that matter:

• You can choose one fund or multiple funds.
• The total released cannot exceed 85% of the excess amount.
• Once you make an election, you cannot revoke it.
• Defined benefit funds may not allow release.

The ATO allows you to make the election in ATO online services through myGov via:

• Super
• Manage
• Concessional Election

If you do not have a myGov account, you can create one and link it to the ATO.

Step 5: What happens if you do not release the excess?

If you do not release the excess, the amount you leave in super can count towards your non concessional contributions cap.

This is the part people miss.

In some circumstances, that can lead to very high tax outcomes, especially if you have already used your non concessional cap or triggered a bring forward arrangement.

It is one reason you should not ignore the ATO determination.

How to reduce the risk of exceeding the cap

Here is the practical checklist.

1) Track employer contributions properly

If you have more than one employer, or you changed jobs, assume you need to pay closer attention.

2) Leave a buffer

ATO online services can lag. Payroll timing can surprise you. Funds can take time to allocate contributions.

If you aim for an exact cap number, you are giving yourself no margin for error.

3) Use carry forward rules deliberately

If you are eligible, the carry forward rules can give you flexibility. Still, you should know your unused amounts and expiry dates.

Use these guides:

• Catch Up Concessional Contributions (Australia)
• How to Check Unused Concessional Contributions in myGov
• Catch Up Concessional Contributions Expiry and the Five Year Rule

And if you want a quick estimate: Catch Up Contributions Calculator

Watch the 60 second version

What happens if you exceed concessional contributions?

FAQs

Does carry forward concessional contributions automatically reduce an excess?

Yes. If you are eligible and you exceed the current year concessional cap, the ATO applies your available unused cap amounts automatically, starting with the oldest year. If you still have excess concessional contributions after that, additional tax may apply.

How is an excess concessional contribution taxed?

Excess concessional contributions are included in your assessable income and taxed at your marginal tax rate, with a 15% tax offset to reflect contributions tax already paid by your super fund.

Can I withdraw excess concessional contributions from super?

You can generally elect to release up to 85% of your excess concessional contributions from your super fund to help pay the additional income tax. If you do not release the excess, it can count towards your non concessional contributions cap.