You may be familiar with the minimum amount an employer has to contribute to an employee’s super each quarter: 11.5% this year and 12% from 1 July 2025. You might not be as familiar with the maximum employer super contribution limit.
The “maximum super contributions base” is the maximum amount of earnings for which an employer must provide superannuation support for an employee. Example In 2024 -25, the maximum contribution base is $65,070 per quarter. ABC Hospital pays the superannuation guarantee of 11.5% to its employees. Because of the maximum contributions base, ABC would not have to pay more than $7,483.05 per quarter for a high income earning doctor, even if that person earned more than $260,280 annually ($65,070 per quarter) in 2024–2025.
Past maximum contributions base
The maximum contribution base generally increases each year in line with the increases in average weekly ordinary time earnings (AWOTE). In recent financial years the maximum super contributions base was: 2024–2025: $65,070; 2023–2024: $62,270; 2022–2023: $60,220; and 2021–2022 $58,920. For the 2025–2026 financial year, however, the maximum super contributions base will decrease to $62,500 from 1 July 2025.
Why will the maximum super contributions base decrease?
The AWOTE data recently released by the Australian Bureau of Statistics show that the maximum super contributions base would normally increase to $68,060 on 1 July 2025. However, back in 2017 when contribution caps were introduced, the super laws were changed to make sure that a single employer was not required to contribute more than the concessional contributions cap for an employee. The 2025–2026 financial year is the first year that a cap to this amount has been triggered. Instead of increasing to $68,060, the maximum contribution base will actually decrease to $62,500. If the government let the maximum contribution base rise to $68,060 on 1 July 2025, this would mean an annual superannuation guarantee contribution of $32,668.80 for a high income employee. This would exceed the concessional contributions cap of $30,000 for 2025–2026 and cause tax issues for the employee. Reducing the maximum contributions base to $62,500 means an employer will not be required to contribute more than $30,000 per year.
What should employers (or high income employees) be doing?
From 1 July 2025 when the higher 12% superannuation guarantee rate commences, employers should check that they’re implementing the new lower maximum contributions base, both to make sure they are not paying more super than they have to and to ensure that they’re not creating an excess concessional contributions tax liability for their employees. Equally, high income earning employees should check that their employer isn’t paying too much super guarantee on their behalf, to make sure they don’t face an excess concessional contributions tax assessment at the end of the year.
Speak to one of our accountants if you have any questions about the changes in tax for 2025.
