Excess Contributions in an SMSF: What Happens?
The total amount you can contribute to super, including your SMSF, is limited to the contributions cap.
| Contribution Cap for the 2026/27 year | Amount |
| Concessional contribution cap | $32,500 |
| Non-concessional contribution cap | $130,000 |
Concessional contributions (CC) are employer contributions or personal contributions you elect to claim as a tax deduction. If eligible, you can carry forward unused concessional contributions for up to five years.
Non-concessional contributions (NCC) are personal contributions for which you don’t claim a tax deduction, including contributions made from wages (after tax has been taken out), an inheritance or a savings account. If eligible, you can elect to bring forward your non-concessional cap, effectively allowing you to make up to three years of your non-concessional cap in one year without exceeding your annual cap.
How do I know if I have exceeded my contribution caps?
After you lodge your SMSF tax return, the ATO identifies whether you have exceeded your contribution caps.
The key steps to the process include:
- The ATO issues you an excess CC determination (ECC), an excess NCC determination (ENCC) or both an ECC and an ENCC– generally electronically through your myGov account.
- If the notice is correct, you have 60 days to make an election, generally through your myGov account or through your tax agent (personal not fund tax agent) or manually using a paper form. The election is irrevocable.
The required actions then depend on whether the details are correct and whether you made any excess concessional or non-concessional contributions.
Hint – Do not release any money from your fund to pay the tax liability to the ATO directly or to yourself before receiving a “release authority” from the ATO. Some people pay the tax liability based on the amended tax return directly from the fund’s bank account. The amended tax return may require payment before you can elect to withdraw cash from your SMSF. If you cannot co-ordinate the payments, you may need to pay the tax liability personally and then elect to have the money released to you from your SMSF.
What happens if I exceed my concessional contributions cap?
Regardless of the option you elect, the ATO automatically amends your personal tax return and includes the excess ECC in your taxable income. You pay tax on it at your marginal tax rate and receive a 15% tax offset. You can elect to release up to 85% of the ECC from your SMSF; the 15% contributions tax is recognised as a tax offset in your personal tax return.
| Options | Actions by your SMSF | Other actions |
| Elect to pay the tax personally | No further action required | Pay it from your personal bank account, not the fund’s bank account. The tax is payable by the due date set out in the amended tax assessment. The ATO will count the ECC toward your NCC cap. |
| Do nothing – the default option is that the tax becomes a personal liability | No further action required | Pay it from your personal bank account, not the fund’s bank account. The tax is payable by the due date set out in the amended tax assessment. The ATO will count the ECC toward your NCC cap. |
| Elect to withdraw up to 85% of the ECC from your SMSF (or another super fund) | Only pay this after the ATO has sent a release authority | The ATO sends the release authority electronically via SuperStream. Generally, the fund’s accountant receives the release authority through their specialised superannuation software. The fund must pay the ATO directly within 10 days and notify the ATO that it has been made. The ATO will refund the difference to the member after the tax liability and any other personal tax debts are satisfied. If you have already paid the tax personally, the ATO will refund the full amount to you (unless you have other unpaid tax debts). |
What happens if I exceed my non-concessional contributions cap?
ENCC are taxed at 45% plus 2% Medicare. This is very harsh, and the ATO allow you to release the ENCC from your SMSF. However, an amount reflecting notional earnings on your ENCC will be taxed personally at your marginal tax rate. You can also release 85% of the notional earnings from the fund, with a15% tax offset reflecting the tax on earnings.
| Options | Actions by your SMSF | Other Actions |
| Default option – you do nothing | The SMSF must pay the amount as directed to the ATO | The ATO issues a release authority 60 days after the initial ENCC notice. The ATO sends the release authority via SuperStream. Generally, the fund’s accountant receives the release authority through their specialised super software. The fund must pay the ATO directly within 10 days and notify the ATO that it has been made. The ATO will refund the difference to the member after the tax liability and any other personal tax debts are satisfied. |
| Elect to have the ENCC and earnings released | As above | As above, except you can make the election before 60 days, so you can receive your refund much quicker. |
| Elect to leave the ENCC in your fund | The fund will pay tax at 47%. | The ATO will issue an amended tax assessment to your SMSF. |