Proposed one-off relief to avoid exceeding the concessional contributions cap under Payday Super
22/10/2026
Employees could have more than 12 months of employer super contributions counted towards their 2026–27 concessional contributions cap where June 2026 quarter contributions were received by their fund in July, alongside contributions under Payday Super.
Schedule 6 of the Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 proposes one-off relief to disregard certain June 2026 quarter employer contributions when calculating an individual’s concessional contributions for 2026–27.
Why it matters
The 2026–27 concessional contributions cap is $32,500. Without relief, the timing overlap could push employees over the cap, particularly higher-income earners, employees who salary sacrifice, and those with multiple employers. Excess contributions are added to taxable income and taxed at marginal rates, with a 15% tax offset, and may affect other income-tested outcomes.
The Bill is not yet law and is currently before the House of Representatives. If passed, Schedule 6 would commence on the next 1 January, 1 April, 1 July, or 1 October following Royal Assent.
What employers need to know
Some employees may have reduced their salary sacrifice contributions to avoid exceeding the cap during the transition. If the relief becomes law, they may wish to revisit their arrangements and consider increasing contributions, taking into account their individual cap position.
How SW can help
SW’s Employment Taxes team can help employers identify employees who may be affected by the proposed relief and assess the impact on existing or recently adjusted salary sacrifice arrangements.
We can also help review contribution strategies and consider the practical steps available if the relief becomes law. Get in touch with our team to discuss what the changes could mean for your workforce.
Contributor
Thomas Grimsey-Carr | Consultant, Tax
