Maximum Super Contribution Base Example

Detailed below is an example of the maximum superannuation contribution base.

The maximum super contribution base limits the level of SG contributions required to be made by an employer on behalf of an employee.

The maximum super contribution base example below illustrates the maximum quarterly cap that employer superannuation guarantee contributions (SGC) are required to be paid on.

The example also shows how irregular salary/wages throughout a year may result in differing levels of employer SG payments, despite two individuals having the same annual income.

An employee’s employment agreement should always be referred to when determining whether or not the maximum super contribution base applies, as an employer may have agreed to pay super contributions on the employee’s total wage, not just up to the maximum super contribution base.
 

Maximum Super Contribution Base Example

 
Detailed below is an example of the maximum super contribution base.

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Example 1: Paul is 58 years of age earning $320,000 in the current financial year. Paul is paid the same amount each quarter ($80,000).

Taking into account the maximum super contribution base, Paul would receive the following SG employer contributions from his employer under this example:

Quarter Salary Quarterly Maximum Contribution Base SG Contributions (@ 9.5%)
Jul-Sept $80 000 $54 030 $5 133
Oct-Dec $80 000 $54 030 $5 133
Jan-Mar $80 000 $54 030 $5 133
Apr-Jun $80 000 $54 030 $5 133

As you can see in the table above, Paul has equal earnings throughout the year and receives a total of $20,532 in super contributions from his employer.

The SGC employer contributions are calculated on the maximum super contributions base, rather than his salary, becuase his salary exceeds the maximum super contribution base in each quarter (quarterly super cap).

Example 2: Jane is 58 years of age also earning $320,000 in the current financial year. However, unlike Paul, Jane’s earnings are irregular throughout the year. This is because Jane receives various bonuses and commissions throughout the year, meaning she has a different salary each quarter.

In this example, the maximum super contribution base would be applied as follows:

Quarter Salary Quarterly Maximum Contribution Base SG Contributions (@ 9.5%)
Jul-Sept $45 000 $54 030 $4 275
Oct-Dec $115 000 $54 030 $5 133
Jan-Mar $50 000 $54 030 $4 750
Apr-Jun $110 000 $54 030 $5 133

As you can see, in this example Jane has the same annual earnings as Paul; however, because Jane’s earnings are irregular, she actually only receives $19,291 in SGC contributions. This is $1,241 less than what Paul receives, despite both of them having the same annual earnings.

You can find a range of other specific examples of how super works here.

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Maximum Superannuation Contribution Base 2018/2019

 
The table below shows the history of the maximum employer superannuation contribution base:

Financial Year Maximum Contribution Base Per Quarter
2019-2020 $55 270
2018-2019 $54 030
2017-2018 $52 760
2016-2017 $51 620
2015-2016 $50 810
2014-2015 $49 430
2013-2014 $48 040
2012-2013 $45 750
2011-2012 $43 820
2010-2011 $42 220
2009-2010 $40 170

 

Superannuation Quarters

 
The superannuation quarters for calculating the maximum quarterly super contribution threshold is as follows:

Quarter Period for SGC Cap
1 1 Jul- 30 Sept
2 1 Oct- 31 Dec
3 1 Jan- 31 Mar
4 1 Apr- 30 Jun

Please feel free to comment below with any views or questions on the maximum super contribution base example shown above.

Chris Strano

Chris Strano created SuperGuy to help the average punter navigate through the complex and ever-changing super rules. It has since become one of Australia's leading digital super resources. If you’re looking for more personalised advice, have a chat with one of our experts at www.superguy.com.au/need-advice

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4 Comments

  1. Kim Vuu

    Your articles are very interesting, and would like your comment for the following matter
    Say if someone earns $500,000 a year and the maximum contribution base for 2018/2019 each quarter is $54,030.00 and the SGC for each quarter is $5,132.85 x 4 quarters = $20,531.40 maximum SGC per year. If we divide the annual SGC by 26 pay runs if the company pays fortnightly will be = to $789.67 per pay run, as you know some of the quarter will only have 6 pay runs and another quarter may have 7 pay runs, so if we pay the SGC for the 6 pay runs by $789.67 per pay will = to $4,738.02, a short payment of $394.83 and for the 7 pay runs will = to $5,527.69 an over payment of $394.84, but for the full financial year the total SGC will = to $20,531.42 as per ATO’s requirement. Are you able to tell me if the SGC for 6 pay runs are short by $394.84 and the full year figures are correct, should we be liable for any Super Contribution Charge and thank you for your advice
    Kim

    Reply
    • Chris Strano

      Kim, this is a great point. I have searched high and low for a definitive answer, but cannot seem to find it. I’m wondering if the contribution base applies to payments in respect of a period, rather than when the actual payment was made. For instance, each quarter has a similar number of working days and wages are paid in respect of the days worked. It seems to me that SGC payments could be easily manipulated if the maximum contribution base was applied to when the payment was made. In any case, I don’t think practicalities of pay periods or workplace administrative processes can justify a reduced quarterly SGC payment when a person’s salary exceeds the maximum contribution base. But I could be wrong.

      Reply
  2. Renee

    What happens if you pay super over the Maximum contribution base?

    Reply
    • Chris Strano

      The maximum contribution base is there merely to reduce the SG obligations on employers. There is no consequences for exceeding the maximum contribution base SG payments to an employee other than the employer contributed more than they had to. There is, however, a risk that the employee may exceed the concessional contribution cap by receiving too much SG payments, especially if they are making other concessional contributions such as salary sacrifice.

      Reply

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