A letter arrives from the ATO headed “excess contributions determination”. It sets out an amount, offers you a choice, and gives you 60 days.
Most people read it as a penalty notice and either pay whatever is assessed or put it aside to deal with later. Both responses can be expensive, because the choice in that letter is a real decision with real consequences, and in the worst case getting it wrong can produce an effective tax rate approaching 94 per cent on the amount involved.
The good news is that the decision is usually straightforward once you understand what each option triggers. This guide explains what happens when you exceed each cap, which election to make, and why the same answer is right in most cases.
First, check whether it is actually an excess
Before doing anything, confirm the determination is correct. Determinations are generated from data reported by funds and employers, and that data is sometimes wrong or incomplete.
- Do you have unused cap from earlier years? Carry-forward concessional contributions can absorb what looks like an excess, if your total super balance was below $500,000 at the previous 30 June. Our guide on carry forward contributions explains it.
- Is a contribution in the wrong year? A contribution counts in the year the fund receives it. A late June payment that landed in July belongs to the following year, and reporting errors here are common.
- Has a reserved contribution been reported correctly? If you used a contribution reserving strategy, the fund reports the contribution in the year it was received, which can generate an automatic determination.
- Was a CGT cap election lodged? Contributions under the small business CGT cap only sit outside the non-concessional cap if the election was made properly, as our guide on small business CGT cap contributions explains.
- Is the reported amount right? Check it against your own records and your fund statements.
If the determination is wrong, that is a different process to the election, and you should raise it promptly rather than electing on figures you dispute.
Excess concessional contributions
The concessional cap for 2026-27 is $32,500, covering employer contributions, salary sacrifice and personal contributions you claim a deduction for.
What happens automatically
The excess amount is added to your assessable income for that year and taxed at your marginal rate, with a 15 per cent tax offset to recognise the tax your fund has already paid on it. The ATO amends your assessment and you receive a bill.
That is generally a modest outcome. You are effectively paying your marginal rate on money that has already had 15 per cent taken out, which is roughly what would have happened had you taken it as salary.
One correction worth making, because a great deal of published material still gets it wrong: the excess concessional contributions charge, an interest-style charge that used to apply on top, was abolished for contributions made on or after 1 July 2021. If you are reading advice that mentions an ECC charge, it is out of date.
The election: release up to 85 per cent
You can elect to have up to 85 per cent of the excess released from your super fund to help pay the tax. The 85 per cent reflects the 15 per cent already paid by the fund. You can nominate one or more funds, and the election is made through ATO online services via myGov.
The election is non-revocable and must be made within 60 days.
Why releasing is usually the right answer
Here is the part that catches people, and it has nothing to do with the tax on the excess itself.
If you do not release the excess, it counts towards your non-concessional contributions cap. Release the full 85 per cent and none of it does. Release less and part of it does.
That reclassification can set off a chain reaction:
- It can push you over your non-concessional cap, generating a second determination.
- It can unintentionally trigger a bring-forward arrangement, locking your caps for three years, as our guide on the bring-forward rule explains.
- Where your non-concessional cap is already nil because your total super balance is at or above the general transfer balance cap, the entire reclassified amount becomes an excess non-concessional contribution.
In that last scenario the amount is taxed twice over, and commentators have noted the effective rate can approach 94 per cent. That is the reason to take the 60 day window seriously rather than filing the letter.
For anyone with a substantial balance, or anyone already using their non-concessional cap, releasing the full 85 per cent is almost always the correct election.
Excess non-concessional contributions
The non-concessional cap for 2026-27 is $130,000, or a bring-forward amount where one has been triggered. When you exceed it, the ATO issues a separate determination with a different set of choices.
| Release | Leave it in | |
|---|---|---|
| What comes out | The excess amount plus 85% of associated earnings | Nothing |
| How it is taxed | 100% of the associated earnings added to your assessable income, with a 15% tax offset | The excess taxed at 47% within the fund |
| Result | An amended notice of assessment and tax at your marginal rate on the earnings only | A notice of assessment for excess non-concessional contributions tax |
Associated earnings are a notional interest amount calculated from 1 July of the financial year in which the contribution was received, through to the date of the determination. They are not your fund’s actual investment return.
For almost everyone, releasing is the better outcome. It means paying your marginal rate on the earnings component only, rather than 47 per cent on the whole excess. A person on a 30 per cent marginal rate who leaves a $50,000 excess in the fund pays $23,500 in tax on money they could simply have taken back out.
If you do nothing
Unlike the concessional determination, inaction here does not necessarily default to the worse outcome. Where no election is made within the time allowed, the ATO will generally proceed on the basis that you want the excess released and issue a release authority to the fund with the highest reported account balance.
That is a helpful safety net, but it is not a plan. You lose the ability to choose which fund the money comes from, which matters if one holds insurance, is in pension phase, or has a different tax component profile.
The short version
| Situation | Usual answer |
|---|---|
| Excess concessional, non-concessional cap available | Release 85%. Preserves cap space and avoids a second determination. |
| Excess concessional, non-concessional cap nil or nearly used | Release 85%. Leaving it in risks the near-94% outcome. |
| Excess non-concessional, marginal rate below 47% | Release. You pay your rate on the earnings only. |
| Excess non-concessional, want the money to stay in super | Model it. Leaving it in costs 47% on the excess, which is rarely worth the preservation. |
These are general patterns, not advice. The right answer depends on your marginal rate, your balance, your cap position and what else you have planned for the year.
Why excesses happen
Almost never through deliberate over-contribution. The common causes are:
- Multiple employers, each paying superannuation guarantee independently
- A bonus or commission, which now forms part of the qualifying earnings base for super
- A salary sacrifice arrangement that was not adjusted after a pay rise. Our guide on salary sacrifice versus personal deductible contributions covers how to size these.
- Timing, where a June contribution lands in July or the reverse
- A notice of intent converting what you thought was an after-tax contribution into a concessional one
- A forgotten bring-forward arrangement triggered in one of the previous two years
- A spouse contribution counting against the receiving spouse’s cap
- An in-specie transfer valued at market value rather than what you paid, as our guide on off market transfers into super explains
Payday super, which commenced on 1 July 2026, changes the pattern for employees. Contributions now arrive every pay cycle rather than quarterly, which makes cap monitoring easier but also means an excess is reached earlier in the year than people are used to.
Traps worth knowing
- 60 days, and the election cannot be revoked. Decide once, decide properly.
- Check there is money to release. If your balance is in pension phase, tied up, or has been substantially withdrawn, a release authority can be difficult to satisfy.
- Determinations arrive late. They generally cannot issue until your return and the fund’s reporting are processed, so a determination for one year often lands well into the next. Do not assume silence means no problem.
- A concessional excess can generate a second determination months later, for the non-concessional cap. The two are connected.
- Division 293 is separate. The additional 15 per cent on concessional contributions for higher income earners is not an excess contributions issue and is not resolved by these elections. Our guide on Division 293 covers it.
- Releasing changes your balance, which flows into your total super balance at the following 30 June and therefore your future contribution capacity.
When leaving it in can make sense
Rarely, but not never.
Someone on the top marginal rate facing a small concessional excess, with plenty of unused non-concessional cap and no plan to use it, may find the difference between the two options immaterial and prefer to keep the money in a 15 per cent environment. Someone whose fund holds an asset that cannot easily be liquidated may have practical reasons to avoid a release authority.
Both are exceptions and both need the numbers run. The default is to release.
If the excess was not your fault
Where contributions exceeded a cap because of special circumstances, and it would be unjust for the ordinary rules to apply, you can apply to the Commissioner to have contributions disregarded or reallocated to another year.
The bar is high. Not knowing the rules, or an adviser’s error, is generally not enough on its own. But genuinely unusual circumstances outside your control are worth raising, and the application is free to make. This is a matter to take to your accountant rather than lodging speculatively.
Where Professional Advice Adds Value
The election itself takes ten minutes in myGov. What takes judgement is everything around it.
At Money Path the work usually starts with checking whether the determination is right at all, since carry-forward capacity, timing and reporting errors mean a meaningful proportion are not. Then it is a question of which election, modelled against your marginal rate, your non-concessional cap position and your total super balance, rather than against a general rule. If a release is the answer, which fund it should come from matters, because that choice can affect insurance cover, pension phase amounts and the tax components of your balance.
The more valuable work is preventing the next one. Most excesses are structural rather than accidental, arising from multiple employers, an unadjusted salary sacrifice arrangement or a bring-forward period nobody tracked. Fixing the cause is worth more than optimising the consequence, and it is a short conversation once a year.
Frequently asked questions
What happens if I exceed my concessional contributions cap?
The excess is added to your assessable income and taxed at your marginal rate, with a 15 per cent tax offset for the tax your fund already paid. You can elect to release up to 85 per cent of the excess from your fund to help pay the tax. The excess concessional contributions charge that used to apply was abolished for contributions made on or after 1 July 2021.
Should I release my excess concessional contributions?
Usually yes. If you do not release the full 85 per cent, the excess counts towards your non-concessional contributions cap, which can trigger a second determination, unintentionally start a bring-forward period, or, where your non-concessional cap is nil, produce an effective tax rate approaching 94 per cent.
What happens if I exceed my non-concessional cap?
The ATO issues a determination giving you two choices. You can release the excess plus 85 per cent of associated earnings, in which case 100 per cent of those earnings are added to your assessable income with a 15 per cent tax offset. Or you can leave the excess in the fund, where it is taxed at 47 per cent. Releasing is better for almost everyone.
How long do I have to make the election?
60 days from the date of the determination. The election cannot be revoked once made, so it is worth getting right the first time rather than lodging quickly.
What happens if I ignore the determination?
For an excess non-concessional determination, the ATO will generally proceed on the basis that you want the excess released and issue a release authority to the fund with the highest reported balance. You lose the ability to choose which fund the money comes from, which matters where funds differ in insurance, pension phase status or tax components.
What are associated earnings?
A notional interest amount applied to an excess non-concessional contribution, calculated from 1 July of the financial year in which the contribution was received through to the date of the determination. It is a formula amount rather than your fund’s actual investment return.
Can I have an excess disregarded?
In limited cases. You can apply to the Commissioner to disregard or reallocate contributions where special circumstances exist and applying the ordinary rules would be unjust. The threshold is high, and not knowing the rules is generally not sufficient on its own. Take it to your accountant rather than applying speculatively.
Taking the next step
If a determination has arrived, diarise the 60 day deadline immediately, then check the figures before you elect. If they are right, releasing is the answer in most cases, and the main remaining question is which fund the money should come from.
And if you have multiple employers, a salary sacrifice arrangement, or a bring-forward period running, it is worth checking your position through myGov before June rather than finding out from the ATO a year later.
General advice warning: This article contains general information only. It does not take into account your objectives, financial situation or needs, and it is not tax advice. Contribution caps are indexed and the figures stated apply to the 2026-27 financial year. The right election depends on your marginal tax rate, your cap position, your total super balance and your circumstances, and elections cannot be revoked once made. Time limits are strict. Confirm your position through ATO online services and seek advice from a registered tax agent and a licensed financial adviser before making an election.
