The SGC contribution cap can refer to the concessional contribution cap or the SGC maximum contribution base.
Either way, both SGC contribution caps will be addressed below.
The SGC contribution caps are important because they determine the level of SGC contributions that should be made into your account and the level of contributions that can be made into your account.
Let’s begin with the SGC contributions that should be made into your account.
SGC Contribution Cap: Maximum Contribution Base
The maximum contribution base SGC contribution base is the limit of SGC contributions that need to be made by your employer.
All employers are required to make superannuation guarantee (SG) contributions into your super account, calculated as a percentage of your wage.
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For example, if you were to earn $100,000 p.a., your employer will have to make mandated employer SG contributions of $9,500 for the year.
However, there is a maximum limit on SG employer contributions.
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The employer SG contribution limits are calculated on the maximum contribution base.
The maximum contribution base is a quarterly salary amount.
An employer is only obligated to pay SGC contributions up to the maximum contribution base.
Therefore, if your salary for a quarter exceeds the maximum contribution base, your employer does not need to pay SGC contributions on your wage that exceeds the base.
The maximum contribution base is as follows:
|Income Year||Maximum Contribution Base Per Quarter|
The maximum contribution base is applied against the employer, not the employee.
Therefore, a person may receive SGC contributions on a salary in excess of the maximum super contribution base if, for example, the employee was on a high income and changed jobs part-way through a quarter, or if the employee had two different high paying jobs.
Maximum Super Contribution Base Example
An example of the maximum super contribution base is as follows:
If you have a salary of $100,000 p.a. ($25,000 per quarter), you will receive SG employer contributions of $9,500 (9.5% x $25,000 x 4).
However, if you earn, say, $240,000 p.a. ($60,000 per quarter), you will only receive SG contributions of $20,531 (9.5% x $54,030 x 4).
This is due to the SGC contribution cap limit on employer contributions.
Employers are only obligated to make superannuation guarantee contributions on wages up to the maximum contribution base, per quarter.
An employer of an employee who is likely to exceed the concessional contribution cap (as a result of multiple employers paying SGC contributions) may be able to apply to the Commissioner of Taxation for an employer shortfall exemption certificate.
This can prevent inadvertent breaches in the concessional cap from SGC payments.
SGC Contribution Cap: Concessional Cap
The other contribution cap relating to SGC contributions is the concessional contribution cap.
A concessional contribution is a type of contribution made into super that the contributor claims a tax deduction for.
SGC contributions are concessional contributions because your employer claims a tax deduction for making them.
Other types of concessional contributions include salary sacrifice contributions and personal concessional contributions.
All concessional contributions count towards the concessional contribution cap.
The current concessional contribution cap is $25,000 per financial year.
The concessional contribution cap is assessed on a per person basis.
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Exceeding the Concessional Contribution Cap
Up to 85% of the excess contributions may be able to be withdrawn. Any amount not withdrawn will count towards the non-concessional contribution cap.
The excess concessional contribution charge will also be levied on the excess amount.
SGC Superannuation Threshold
Your employer is required to make mandated SGC contributions into your super account equal to 9.5% of your ordinary time earnings if:
- you are over 18 and earn more than $450 before tax in a calendar month
- You are under 18 and work more than 30 hours per week and earn more than $450 before tax in a calendar month
In some cases, your employer may be required to contribute more than 9.5% of your salary to your super fund if your employment agreement or award requires them to.
Tax on SGC Superannuation
All SGC contributions are taxed at 15% when entering your super fund.
This is referred to as contributions tax.
An additional Division 293 tax is payable by high-income earners
The Division 293 tax is another 15% tax on top of the standard contributions tax.
A high income earner is a person who has income for Medicare Levy surcharge purposes exceeding $250,000 p.a.
Low income earners can receive a low income superannuation contribution.
A low income superannuation contribution is a contribution automatically made by the Government into a person’s super account.
The low income superannuation contribution is intended to be a refund of contributions tax paid by low income earners.