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.

For 2016/17, the concessional contributions caps are:

• $30,000 if you're less than age 49 on 30 June 2016 and
• $35,000 if you're age 49 or over on 30 June 2016

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

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 $300,000 or greater in a financial year. 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 $180,000 each year without incurring penalty tax. The non-concessional contributions cap is 6 times the concessional contributions cap (for 2016/17 financial year, it is $30,000) and will therefore increase as the concessional contributions cap is indexed.

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

If you are aged 64 or less, you can contribute more by bringing forward an additional two years’ worth of contributions ie $540,000 in total. This means your after-tax contributions can exceed the $180,000 per year cap as long as they don’t exceed $540,000 in a three year period. For example, if you are aged 64 and make total after-tax contributions of $200,000 in this financial year, you can contribute a further total of $340,000 in after-tax contributions during the next two financial years.

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.

iIf you triggered the ‘bring forward non-concessional cap’ in the 2013/14 financial year, your relevant non-concessional cap under this rule will be $450,000 until the end of the 3 year period. For further information contact your financial adviser or visit ato.gov.au.


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