Superannuation Maximum Contribution Base and Concessional Cap

The superannuation Maximum Contribution Base is the upper earnings limit for each quarter that an employer is obliged to pay superannuation contributions.

The Maximum Contributions Base for 2015/16 financial year is $50,810 per quarter —(this figure is indexed each year and provided by the ATO).

An employer is obliged to pay superannuation contributions on ordinary time earnings up to $50,810. This equates to $4.826.95 superannuation per quarter (or $19,307.80 p.a.).

Each quarter stands alone, so the earnings, for superannuation purposes, reverts back to zero at the start of the next quarter.

Of course, the employer can be more generous and pay more superannuation contributions on earnings above $50,810.  Note, this is not a limit.  The Maximum Contribution Base just represents the maximum superannuation obligation that the employer must meet.

Here’s an example:

  Apr’15 May’15 Jun’15 Quarter Total 
Wages $ 20,000.00  $ 20,000.00 $ 20,000.00 $      60,000.00
Super $   1,900.00 $    1,900.00 $   1,026.95  $        4,826.95


   Jul’15  Aug’15 Sept’15  Quarter Total 
Wages $ 20,000.00 $ 20,000.00 $ 20,000.00 $      60,000.00
Bonus $ 20,000.00      
Super $   3,800.00 $   1,026.95 $                – $        4,826.95 

You can see from the example above that the superannuation contributions are capped in Jun’15 and Aug’15.

Quite often our employers want to average out the yearly super contributions of $19,307.80 to a monthly figure of $1,608.98.  This method is not recommended.

The Maximum Contributions Base is a quarterly cap (not an average cap).  This becomes difficult to manage if an employee is employed, terminated or on LWOP part way through the month.

Most payroll systems have the option to select the Maximum Contributions Base and automatically ceases to calculate the superannuation contribution on any amount in excess of $50,810 for the quarter.

Concessional caps:

A concessional contribution cap is a cap on the value of superannuation contributions that can be taxed at a concessional rate.

Concessional caps apply to employer contributions (comprising of the superannuation guarantee and salary sacrifice).

The concessional caps do not limit the amount of contributions that can be placed into the fund, they provide the point at which the superannuation contributions are taxed at a higher rate if contributions are in excess of the cap.

Employees <49 years of age have a concessional cap of $30,000 in 2015/16 financial year.

Employees 50+ years of age have a concessional cap of $35,000 in 2015/016 financial year.

Please note that in regards to the Apr – Jun’15 quarter, if the contributions were to be paid in Jul’15, then this will impact on the concessional caps for the 2016/17 financial year.

The Apr-Jun’16 would then be paid in Jul’16 impacting on the concessional cap for the following financial year.

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