Exceeding the non-concessional contributions (NCC) cap is one of the most costly mistakes you can make with super — excess NCCs attract a penalty tax of 47% unless you take action to withdraw them. Understanding how the cap works, and what happens when you go over it, is essential for anyone making voluntary after-tax super contributions.
The Non-Concessional Contributions Cap
Non-concessional contributions are contributions made from after-tax money — money on which you have already paid income tax. They include:
- Personal contributions where you do not claim a tax deduction
- Spouse contributions
- Transfers from foreign super funds (in some circumstances)
Annual NCC cap: $120,000 per financial year (FY2025–26)
Bring-forward rule: If your total super balance (TSB) at 30 June of the prior year is below certain thresholds, you can trigger the bring-forward rule and contribute up to:
- $360,000 over 3 years if TSB < $1.66M
- $240,000 over 2 years if TSB $1.66M–$1.78M
- $120,000 (no bring-forward) if TSB $1.78M–$1.9M
- $0 (no NCCs permitted) if TSB ≥ $1.9M
Thresholds are indexed and subject to change — verify current thresholds at the ATO.
What Counts Toward the NCC Cap
Any contribution to a super fund that is not a concessional contribution counts as a non-concessional contribution. This includes amounts you may not have intended as NCCs:
- Excess concessional contributions that you do not elect to release from super are treated as NCCs in the fund — and can inadvertently push you over the NCC cap as well
- Recontribution strategy amounts: Withdrawals from super that are recontributed count as NCCs
- Downsizer contributions are excluded — they do not count toward the NCC cap (they have their own separate cap of $300,000 per person lifetime)
What Happens When You Exceed the NCC Cap?
The ATO Assessment
The ATO identifies excess NCCs through data from your super fund. You will receive an Excess Non-Concessional Contributions Determination (not called an “assessment” for NCCs — the terminology differs from CCs).
Unlike excess concessional contributions, where the excess is automatically included in your assessable income, for NCCs you are given a choice (election) about what happens.
The Election — You Have 60 Days to Decide
When the ATO issues the determination, you have 60 days to elect whether to:
Option A: Withdraw the excess NCCs and associated earnings
You elect to release the excess NCCs from your super fund. The ATO calculates the associated earnings amount — an adjustment to account for the fact that the excess has been sitting in your fund earning investment returns. The associated earnings amount is:
- Calculated using a formula involving the 90-day Bank Bill rate (not actual fund earnings)
- This associated earnings amount is included in your assessable income and taxed at your marginal rate
- The excess NCC itself (the principal) is withdrawn tax-free (as it was already after-tax money)
- You receive a 15% non-refundable tax offset on the associated earnings amount
Example:
- Excess NCC: $50,000
- Associated earnings (formula): $4,000
- Tax on associated earnings: $4,000 × 47% = $1,880
- Less 15% offset on associated earnings: $4,000 × 15% = $600
- Net tax: $1,280
- The $50,000 excess is returned to you outside super, tax-free
Option B: Leave the excess in super and pay 47% penalty tax
If you do not make an election, or elect to leave the excess in super, the ATO assesses Excess Non-Concessional Contributions Tax at 47% on the excess amount.
- This is extremely costly — on a $50,000 excess, the penalty tax would be $23,500
- The fund is directed to pay this tax from your super account
- The after-tax balance remains in super
In almost all cases, Option A (withdrawal election) is significantly cheaper than Option B.
How to Make the Election
The election to release excess NCCs is made through the ATO’s myGov portal within the 60-day period after the ATO issues the determination. The ATO will then issue a release authority to your fund. Your fund is required to release the funds to the ATO, who then sends you the after-tax amount.
How to Avoid Excess Non-Concessional Contributions
1. Track your total super balance: Check your TSB at 30 June each year via myGov — this determines whether you can use the bring-forward rule and what your maximum NCC is.
2. Monitor bring-forward periods: If you triggered a bring-forward in Year 1 (contributing $360,000 over 3 years), you cannot make further NCCs until the 3-year period ends.
3. Be careful with excess CC rollovers: If you exceed the CC cap and do not elect to release the excess from super, the gross excess is treated as an NCC — which can then compound into an excess NCC issue.
4. Note the $1.9M TSB limit: If your TSB at 30 June exceeds $1.9M, you cannot make any NCCs at all. Even $1 over becomes excess.
5. Check before contributions: Before making a large after-tax lump sum contribution (e.g. from an inheritance, property sale, or recontribution strategy), calculate whether it will breach the NCC cap or bring-forward limits.
Frequently Asked Questions
I exceeded the NCC cap — can I just put the money back and avoid the tax? You can elect to withdraw the excess, which avoids the 47% penalty tax. However, you still pay marginal tax on the associated earnings amount. You cannot simply “put the money back” in the sense of undoing the contribution — the ATO process requires following the election and release authority procedure.
What if I didn’t realise I was in a bring-forward period? Bring-forward periods are tracked by the ATO. If you triggered a bring-forward in Year 1 (e.g. by contributing $300,000), you are in a 3-year bring-forward window and can only contribute up to the remaining portion ($60,000) in Years 2 and 3. If you are unsure of your bring-forward status, check the ATO’s myGov portal.
Does a downsizer contribution affect the NCC cap? No — downsizer contributions (up to $300,000 per person from the proceeds of selling the family home) do not count toward the NCC cap and have no TSB restriction. They are a separate category of super contribution.
Can I avoid the issue by holding the money outside super? Yes — if you are uncertain whether you have NCC cap room, keeping the money in a bank account or non-super investment while you verify your position is prudent. There is no penalty for not contributing — only for contributing too much.
See also: Super Tax. For official guidance, see the ATO’s excess non-concessional contributions information. For personal advice on contribution strategy, speak with a licensed financial adviser or registered tax agent through MoneySmart.