What are the limits on contributions?

There are limits, called ‘contribution caps’, on what you and your employer can put into your super before higher tax rates apply. More importantly, it’s you (not your employer or super fund) that needs to monitor what goes into your super so you don’t exceed these contribution caps. The information below applies to Defined Benefit members only. 

Concessional contributions cap

1. What is my concessional contributions cap?

Concessional contributions include those made by your employer on your behalf as well as any salary sacrifice or personal after-tax contributions for which a personal tax deduction has been claimed. Your concessional contributions cap is the maximum amount of concessional contributions which can be made to your super each year before a higher tax rate applies.

From 1 July 2017, the concessional contributions cap has been recduced from $30,000 (or $35,000 for individuals over age 49) to $25,000 per financial year, irrespective of age.

These caps apply to all contributions made to a superannuation fund on your behalf (not each fund).

From 1 July 2019, if your total super balance is less than $500,000 on 30 June of the previous financial year, your concessional contribution cap will be increased by the total unused amounts of your concessional contributions cap from the previous 5 years.  You commence accumulating unused cap amounts from 1 July 2018.

2. What counts towards my concessional contributions cap?

As a Defined Benefit (DB) member, you'll need to understand how your concessional contributions are calculated.

In 2007 we wrote to you explaining which contributions count towards your cap for concessional contributions. This letter included an explanation of how notional taxed contributions work. Please re-read this letter and if you've misplaced your letter the answer below should help.

For DB members, contributions that count towards your cap for concessional contributions are:

• an amount called ‘notional taxed contributions'


• amounts you salary sacrifice into your SuperSave account (does not include amounts you salary sacrifice as nominated contributions)


• any other amounts Westpac Group pays into your super (eg bonuses)

Contribution table 1

3. Why do I have a notional taxed contributions amount?

Because of the way defined benefit superannuation plans are funded by employers, the 9.5% employer Superannuation Guarantee (SG) payment may not reflect the real contribution an employer is making to fund super for defined benefit members.

So the government devised a standard formula to calculate the amount your employer contributes to your defined benefit super – it's called your 'notional taxed contributions'.

5. What happens if my notional taxed contributions exceed the limit?

The government recognises that applying its set formula means that some member’s notional taxed contributions will exceed the concessional contributions cap, or they might exceed it in future. So there are transition rules allowing you to have notional taxed contributions (NTCs) that would otherwise be greater than the cap – it's called 'grandfathering'.

Grandfathering applies to you if:

• For 2009/2010 and later financial years grandfathering was reset on 12 May 2009. So to be eligible for grandfathering protection for these financial years you must not have increased your nominated contribution rate since 12 May 2009.

For prior years, the grandfathering applies to you if:

You have not increased or decreased your nominated contribution rate* to Westpac Group Plan between 5 September 2006 and 30 June 2007 (government determined dates) and

• You have not increased your nominated contribution rate* since 1 July 2007.

Grandfathering means that even if your NTCs would exceed the cap under the formula, your NTCs are automatically deemed to be within the concessional contributions cap for taxation purposes. So the higher tax rate will not apply to your notional taxed contributions. However, if you or Westpac Group make any before-tax contributions to your SuperSave account, then these will be treated as contributions that exceed the cap and may be taxed at the higher tax rate. See the section “What happens if you exceed the concessional contributions cap?” below for further information.

If you don't meet the requirement for grandfathering and your NTCs exceed the contributions cap, it means that those NTCs above the cap may be taxed at the higher tax rate, as outlined in ‘What happens if you exceed the concessional contributions cap?’ below.

* Remember, your nominated contribution rate affects your defined benefit and can be 0% to 8% of your superannuation salary. It is different to anything extra you put into your SuperSave account. 

6. I salary sacrifice into my SuperSave account. Are these included in the grandfathering arrangement?

No. Only notional taxed contributions calculated under the government's formula are included in the grandfathering arrangement. This means that only your nominated contributions (not your SuperSave contributions) are included in the grandfathering arrangement.

7. How long will this arrangement apply for?

We believe this arrangement will continue for many years. Having said this, we realise that from time to time governments ‘change the rules', so we can't provide any guarantees on this.

What happens if you exceed the concessional contributions cap?

You can contribute as much as you like to your super, however you may incur additional tax if your contributions exceed your concessional contributions cap. Please refer to the ATO website at ato.gov.au for further details on the contributions caps.

Generally, excess concessional contributions are taxed at your marginal tax rate, less a 15% offset for the tax already paid by the fund. Excess concessional contributions not released from super under the relevant release authority also count against your non-concessional contributions cap and if they exceed this cap, may attract tax on the excess non-concessional contributions.

High income earners’ contributions tax

If you’re classified as a high income earner, you may need to pay an additional 15% tax on some or all of your contributions. Currently you’re considered to be a high income earner if your ‘income’ is $250,000 pa or greater in a financial year. Prior to 1 July 2017, the high income threshold was $300,000 pa.  The definition of ‘income’ for the purposes of this measure includes contributions which have had contributions tax applied to them, unless those contributions are excess concessional contributions. If you’re liable for this tax the ATO will notify you after the end of the financial year. Further information on this tax is available on the ATO website at ato.gov.au.

Non-concessional (After-tax) contributions cap

Amounts you put into super from you after-tax salary or savings are counted against a ‘non-concessional contributions cap’. Currently, you can make after-tax contributions up to the cap of $100,000 each year without incurring penalty tax.  If your total super balance is $1.6 million or more on 30 June of the previous financial year, your non-concessional contributions cap will be nil.

Are you age 64 or less at 1 July in the financial year?

If you are aged 64 or less, and satisfy other conditions, you may be eligible to utilise bring-forward arrangements to allow you to make larger non-concessional contributions over a two or three year period.

If you are aged 64 or less on 1 July 2017 and have a total super balance of less than:

  • $1.4m, you may be able to make non-concessional contributions of up to $300,000 over a three year period
  • $1.5m, you may be able to make non-concessional contributions of up to $200,000 over a two year period.

If you triggered the bring-forward arrangements in the 2015/16 or 2016/17 financial years and have not contributed your full bring-forward amount before 1 July 2017, transitional arrangements apply to reduce your non-concessional contributions cap.  If this applies to you, we recommend you refer to the ATO or seek professional advice to determine your non-concessional contributions cap.

 It's important to monitor your contributions against your caps each year. Note that any contributions above your concessional contributions cap (see “Concessional Contributions Cap” section above) will also count towards your non-concessional contributions cap.

What happens if you exceed the non-concessional contributions cap?

Generally, excess non-concessional contributions which are not released from super attract tax on the excess non-concessional contributions, resulting in these excess contributions being taxed at the top marginal rate of tax plus Medicare Levy. Where excess non-concessional contributions are released from super, they are not subject to additional tax, however, the notional earnings on the excess non-concessional contributions which are released from super are taxed at your marginal rate, less a 15% offset for the tax already paid by the fund.

Questions? You can contact the Westpac Group Plan - Defined Benefit on 1800 227 262 from 8.30am to 5.30pm Mon - Fri AEST