Superannuation: the 12% rate and the caps that matter

Employer obligations

SG is 12% of ordinary time earnings — which includes most allowances, loadings and shift penalties, but excludes overtime. It's payable for almost all employees, and also for contractors whose contract is wholly or principally for their labour, even when they invoice through an ABN. That last point catches out a large share of trades, cleaning and creative-services businesses.

Due dates are 28 October, 28 January, 28 April and 28 July, and contributions must reach the fund by then. Late payment triggers the superannuation guarantee charge — shortfall plus nominal interest plus an administration component — and none of it is deductible. Directors can also be made personally liable through a director penalty notice.

Concessional contributions

Concessional (before-tax) contributions are capped at $30,000 a year and taxed at 15% inside the fund. They include employer SG, salary sacrifice, and personal contributions for which you lodge a notice of intent and claim a deduction.

For anyone on a marginal rate above 30%, a personal deductible contribution is one of the most reliable tax strategies available: you save the difference between your marginal rate and 15%. The money is preserved until a condition of release, which is the trade-off.

Carry-forward. If your total super balance was under $500,000 at the previous 30 June, you can use unused concessional cap from up to five earlier years. This is the single most useful provision for anyone with a one-off income spike — a capital gain, a bonus, a good year in business. A person who has contributed little for years may be able to make a deductible contribution well above $30,000 in one year.

Non-concessional contributions and bring-forward

Non-concessional (after-tax) contributions aren't deductible and aren't taxed in the fund. The annual cap is set as a multiple of the concessional cap, and under the bring-forward rules younger members may contribute up to three years' worth in one year — subject to their total super balance at the prior 30 June. Exceeding the cap creates excess contributions issues, so check the balance test before contributing a large sum.

Division 293 for higher earners

If your income plus concessional contributions exceeds $250,000, an extra 15% applies to the contributions above the threshold — effectively taxing them at 30%. That's still well below the top marginal rate plus Medicare, so super usually remains worthwhile; it just changes the arithmetic of how much to put in and whether other strategies come first.

The two expensive mistakes

Paying super late. One day late converts a deductible expense into a non-deductible charge with interest. Diarise a week early and confirm receipt by the fund.

Missing the notice of intent. A personal contribution is only deductible if you lodge a valid notice of intent with your fund and receive acknowledgement before lodging your return or starting a pension. Every year people contribute correctly and lose the deduction on paperwork.

Frequently asked questions