Super and high-income earners

Super offers a valuable opportunity for high-income earners to grow their retirement savings. However, for individuals with qualifying income and super contributions over $250,000, there may be implications to super contributions and tax benefits.

As an employer, understanding the concessional contributions cap, the maximum super contribution base (MSCB), and Division 293 tax, is important to be able to support your higher earning employees.
 

What's on this page?

• Concessional contributions cap
• Maximum super contributions base (MSCB)
• Division 293 tax
• What you could do
   

Concessional contributions cap

Concessional contributions are generally ‘before-tax’ contributions to super. They include:

• employer SG contributions,
• any ‘salary sacrifice’ contributions, and
• employer contributions to an employee’s super that subsidise insurance premiums or fees.

The general cap for concessional contributions for the 2025/2026 financial year is $30,000.
 

Why it’s important to keep contributions within the concessional contributions cap?
 

You’re required to pay SG on your employees’ earnings to the maximum super contributions base (see below).

NOTE: Generally anything above this will see the employee exceeding their cap, resulting in additional tax liabilities for them.

It’s a good idea to monitor total concessional contributions for all your employees, and suggest that they speak with a financial adviser to potentially adjust any salary sacrifice arrangements which can help them avoid exceeding the cap.

What is a high-income earner?

In the context of super, generally someone whose income exceeds thresholds set by the government, which have implications for super contributions and tax benefits.

High-income earners with qualifying income and super contributions exceeding $250,000 per annum are subject to an additional 15% tax on the concessional contributions that exceed the cap, known as Division 293 tax.

If someone earns more than $62,500 per quarter, their employer is only required to pay SG on earnings up to the MSCB for the 2025-2026 financial year.

Read more on the ATO website >
 

Maximum super contributions base (MSCB)
 

The MSCB is the maximum salary amount upon which you need to pay your Superannuation Guarantee (SG) contributions. The Australian government sets this limit.

For the 2025/2026 financial year, the amount is $62,500 per quarter, which would equate to $7,500 in SG contributions.

If an employee receives nothing other than SG contributions, this base will ensure they will not exceed the Concessional Contributions Cap.

What the MSCB means for you
 

SG contributions on salaries above the MSCB aren’t mandatory, however some employers still provide SG on their employees’ full earnings, while others do not.

This is entirely a business decision, not a regulated one. It’s worth noting that if you do opt to contribute SG above the quarterly contribution base for employees, they may exceed their concessional contributions cap which can result in certain implications.

Either way, it’s a good idea to let any employees who are earning over the quarterly earnings know what they should expect to receive in their account by way of SG.
 

Exceeding the cap
 

For the 2025/2026 financial year, the gap between the 12% Superannuation Guarantee (SG) payable based on MSCB and the concessional contributions cap is minimal:

• The MSCB for 2024 is $62,500 per quarter, which amounts to $250,000 in earnings per year.
• At 12% SG, employers must contribute $30,000 annually to the employee’s super.

With a general concessional contributions cap of $30,000, there is no gap between the SG contribution maximum amount.

This means additional concessional contributions such as salary sacrifice or employer contributions to an employee’s super that subsidise insurance premiums or fees, may cause the member to exceed their cap.

How to pay employee super contributions

Learn how you can help simplify and enhance the management of your employer super contributions.

Explore features >
 

Division 293 tax
 

Some of your high-income earning employees may be subject to Division 293 tax which adds an additional 15% tax on concessional super contributions where an employee’s combined qualifying income and concessional contributions exceed $250,000 in a financial year.

For example, if an employee earns $245,000, receives $26,950 in SG contributions, and salary sacrifices another $550, the combined ‘income’ total is $272,500, meaning Division 293 tax will be applied to the $22,500 that exceeds the $250,000 limit, at a rate of 15%.

It may be worth letting any affected employees know about the Division 293 tax implications, and of course, consider the impact of this tax when discussing salary sacrifice arrangements with them.

Impacted employees are able to fund any Division 293 liability through their super fund or pay it directly. For more information please refer to the Division 293 tax on concessional contributions by high-income earners on the Australian Taxation Office’s website.

What you could do
 

• Speak with your employees about any salary sacrifice arrangements they may have and ensure they’re aware of their concessional contributions cap.
  
  
• Assess whether you have any employer contributions going to your employees that are intended to subsidise insurance premiums or fees, and see if there may be an impact for your high-income earners.
  
  
• Some employees may wish to negotiate salary packaging options.
  
  
• If any of your employees have concessional contributions that go over the cap, it could result in additional tax liabilities for them, and therefore it’s worth them speaking with a financial or taxation adviser about their options.
  
  

Are SG and salary sacrifice considered ‘income’?

While SG and salary sacrifice contributions are not considered income in terms of discretionary take-home pay or taxable income, they are included in calculations that determine eligibility for certain tax offsets, government benefits, and in some cases, Division 293 tax.

Read more on the ATO website >