posted in: Building Wealth

Super Contribution Caps 2026-27: What high-income earners should know

A new financial year usually means new super contribution caps, and this year is no exception.

With the 2026-27 changes now a couple of months in, the question we’re hearing from high-income clients is the same one we hear every year: the caps have gone up, so how quickly can they be filled? It’s a reasonable place to start, but it’s the wrong first question, and starting it early is exactly what makes the answer easier to get right, rather than scrambling to fill the cap in the final weeks of June.

The tax benefit of contributing to super is real, but it isn’t the main game. It’s the part most people focus on when they speak to a financial advisor in Sydney, and the most powerful thing about putting money into super is far simpler: it goes into investments and gets to compound for years, sometimes decades, in a low-tax environment. Once that’s the starting point, the conversation about caps, catch-up contributions and Division 293 becomes a lot more useful, because it stops being about chasing the next deduction and starts being about whether super is actually the best home for the money right now.

Everyone gets really excited and sort of sold on the idea of a tax deduction, a tax benefit. Contributing to super concessionally is very tax effective. But the most powerful thing about contributing to super is just the fact that the money is going into investments. Tax efficiency is helpful, but the main thing is you’re investing.
– Ethan Stein, Director and Financial Advisor at Montara Wealth

With that as the backdrop, here’s what’s actually changed for 2026-27, and how to think about using it.

What are the key super contribution changes for 2026-2027?

From 1 July 2026, the concessional (before-tax) contributions cap increased to $32,500, up from $30,000. This covers employer Super Guarantee contributions, salary sacrifice super and any personal contributions claimed as a tax deduction.

For a high-income earner already salary sacrificing to last year’s $30,000 cap, that’s an extra $2,500 of cap space this financial year. Contributing that additional amount at the top marginal rate creates a net tax benefit of roughly $800, once the 15% contributions tax inside super is accounted for. Useful, but as above, it’s the secondary benefit.

The non-concessional (after-tax) cap has also moved, up to $130,000 for 2026-27, and the general transfer balance cap has increased to $2.1 million, which flows through to the total super balance thresholds that determine eligibility for several of the strategies covered below.

The other change worth knowing about, even though it isn’t technically a contribution cap, is Payday Super. 

From 1 July 2026, employers must pay Super Guarantee contributions in line with each payday rather than quarterly, generally within seven business days. It doesn’t change how much can be contributed, but it does mean a super balance should now reflect income more promptly through the year, which matters when tracking how much cap space has already been used. If you’re the one paying the super rather than receiving it, it also changes your cash flow rhythm, which we cover in our guide to financial planning for entrepreneurs.

Who actually benefits from carry-forward contributions?

Carry-forward, or catch-up, concessional contributions allow the use of any unused concessional cap from the past five financial years, provided the total super balance was below $500,000 at the end of the previous financial year.

It really depends on the person’s situation, and it’s generally people with higher income, which doesn’t have to come from salary or a consistent income stream. It can be a one-off capital gain from selling an investment property, or simply strong cash flow relative to a lower super balance. Either way, carry-forward contributions can suit a deliberate top-up as part of a longer-term strategy.

Across Montara’s client base of pre-retirees and working professionals, the right approach varies. For some, maximising carry-forward contributions immediately is the priority. For others, the smarter move is building personal wealth first, keeping the option of catch-up contributions available for a later, higher-income year while the unused cap remains on the table (keeping in mind you can only look back 5 years so the longer you wait you will lose caps).

What should high-income earners know about Division 293?

Division 293 is an additional tax on concessional super contributions for anyone whose income (plus certain add-backs) exceeds $250,000 in a financial year. Above that threshold, concessional contributions are effectively taxed at 30% instead of 15%.

The $250,000 threshold hasn’t moved since 2017, so more people cross it each year through ordinary wage growth, a bonus, or a strong year for equity compensation. Even so, a 30% total tax on the way into super remains meaningfully cheaper than the 47% top marginal rate outside it. 

The sensible response is to understand the tax and plan around it, not to treat it as a reason to stop investing altogether. Div 293 makes super less tax effective for high earners, not tax ineffective, and that distinction matters more than the headline rate suggests.

Bonus, pay rise or share vesting pushed income higher this year?

A bonus, pay rise or share vesting event that lifts income for a year is genuinely an opportunity, not just a tax problem to manage. Montara generally encourages clients to use part of a bonus or one-off payment to reward themselves for the year they’ve had, whether that’s a trip, a new set of skis, or something for the family, while directing the rest with intention.

From a super perspective, a high-income year is often exactly when carry-forward contributions really earn their keep, since unused cap space is being used in the year the deduction is worth the most. It’s also worth checking whether the extra income tips the year over the Division 293 threshold, since that changes how much of the tax benefit actually gets captured.

But super isn’t always where that extra income should go, and this is where career stage matters. A young working professional trying to buy a first home may already have a healthy super balance simply through the Super Guarantee, while their personal wealth outside super is the part actually struggling.

For that client, it can be more tax effective on paper to direct a bonus or vesting proceeds into super, but that doesn’t mean it’s the right call. It may make more sense to accept the higher tax bill and put the money toward securing that home instead, since a leveraged home asset can be one of the more powerful wealth-building tools available, and it’s the part of the plan that needs the attention that year, not the super balance.

Is maximising super contributions always the right move?

Not automatically, and this is where a lot of generic advice falls short. Whether it makes sense to maximise the caps depends entirely on the goal, and on when that money will actually be needed.

One of the most common trade-offs seen with successful pre-retirees: a very healthy super balance, but limited assets outside super, alongside a goal of stepping back from work well before preservation age.

If you have a really healthy superannuation balance and you want to retire at fifty, the big problem is that at age fifty you can’t access your superannuation. We don’t want you in a position where you’ve got five million in super but nothing personally apart from your home, which means you actually have to keep working even though your superannuation is really strong. – Ethan Stein, Director and Financial Advisor at Montara Wealth

In that scenario, maximising super contributions can work against the goal. The better move may be building personal, accessible wealth instead, to bridge the gap between stepping back from work and when super becomes available. Retirement planning in Sydney comes down to the actual goal, and working backward from there, rather than assuming more super is automatically the right answer.

When does it make more sense to keep cash available? 

Cash flow management is like blood through a heart when investing. Keeping a healthy cash buffer isn’t the opposite of investing well, it’s part of doing it well.

Early in an investing journey, particularly while saving for a first home, it’s completely normal to hold a large percentage of total wealth in cash. From a pure percentage-of-wealth view that can look inefficient, but from a risk perspective, at that stage, it makes sense.

As wealth builds, the calculation shifts, but access to cash still matters, for a mortgage, school fees, an investment property deposit, or simply as a buffer. One option worth considering is holding funds in an offset account against a home loan. At current interest rates, that’s not an unattractive return, and because it applies to the family home rather than an investment property, it’s effectively a tax-free one, reducing interest payable while retaining access to that capital if needed.

What mistakes do people commonly make with extra super contributions?

Two stand out more than any others.

Not claiming the deduction. People make a personal contribution to super, via BPAY for example, and assume the tax deduction happens automatically. It doesn’t. 

A Notice of Intent to Claim a Deduction form needs to be lodged, and there’s a strict window to do it, before lodging the tax return or by the end of the following financial year, whichever comes first. Miss that window and the deduction is lost permanently.

We’ve seen people that have contributed thirty thousand dollars to super prior to engaging with us. They didn’t lodge a form, so they cost themselves, from a tax perspective, around ten thousand dollars. We can redo it, but it involves making another contribution, assuming the eligibility still remains in place. By no means have they lost that thirty grand, it’s in their super, they just could have done it better. – Ethan Stein, Director and Financial Advisor at Montara Wealth

Getting the order of contributions wrong. Different contribution types come with different restrictions, not just on the contribution itself but on the total super balance at the time it’s made. 

As a general rule, it makes sense to use up the contributions with balance-based restrictions first, then make the contributions that don’t carry those eligibility requirements. Getting this order wrong can mean permanently losing access to a strategy that would otherwise have been available.

How is it decided whether someone should contribute more?

Rather than starting with a national average, Montara’s process starts with a blank sheet of paper, mapping out what a client’s life looks like over the next five, ten and fifteen years.

If you’re living in North Manly in Sydney, the average super balance across Australia has absolutely no relevance to you, because that includes areas where the cost of living is much more affordable. – Ethan Stein, Director and Financial Advisor at Montara Wealth

From there, shortfalls are identified, which is common, particularly for pre-retirees and working professionals, and the right mix of strategies is layered in to close the gap. Super is one part of that toolkit, alongside shares investing, property investing, cash and insurance, not the automatic starting point.

A client example: Balancing a strong super balance with an earlier retirement goal

Consider a couple who have spent most of their working life in senior roles and built a super balance of around $5 million by their late forties, but who wants to step back from work at 50 with limited assets outside super.

At living expenses of $150,000 a year, those clients would need a substantial personal portfolio, likely well over a million dollars, to fund the ten-year gap between age 50 and when super becomes accessible. 

Starting with a client like this means the focus isn’t only on growing the super balance for the years beyond 60. It’s equally about building enough personal, accessible wealth to bridge that ten-year gap.

That can mean deliberately accepting a higher personal tax bill in the near term, pulling back on salary sacrifice, and directing cash flow into building wealth outside super instead, because the goal isn’t the largest possible number in one account. It’s the flexibility to actually stop working when the client chooses to.

A practical way to think about the 2026-27 caps

Before deciding how hard to push super contributions this year, it’s worth working through:

• How much of the new $32,500 concessional cap, plus any unused carry-forward amount, is actually available?
• Is there a bonus, pay rise or vesting event this year that makes this a particularly effective year to use carry-forward contributions?
• Is there a goal, such as retiring earlier than preservation age, that requires wealth accessible before super?
• Is there a nearer-term priority, a mortgage, school fees, a deposit, that should take precedence over additional super contributions this year?
• If making a personal contribution, has the Notice of Intent to Claim a Deduction been diarised, and are contributions being made in the right order?

There’s no single right answer, and anyone offering one without understanding the full picture is guessing. That’s the value of sitting down with a financial advisor in Sydney who can see your whole position, not just the super component. 

The caps are a tool, not a target. Used well, alongside the rest of a client’s financial position, they can meaningfully accelerate wealth. Used on autopilot, they can leave someone asset-rich in super and cash-poor everywhere else.

Book a quick Wealth Planning Consultation and we’ll help you see where you stand, what’s possible, and how to make it happen.

• Understand exactly how much contribution cap space is available this year
• Work out whether maximising super, or holding cash, is the right call for your goals
• Get a clear plan instead of guessing at the “right” number to contribute

Get started here.

Financial Disclaimer: The information provided in this article is for general knowledge and informational purposes only and does not constitute financial advice. Individual circumstances vary significantly. It is essential to consult with a qualified and licensed financial planner before making investment decisions. Past performance of any asset class is not indicative of future results. Contribution caps, thresholds and tax rules referenced in this article reflect the 2026-27 financial year and are subject to change.