By Philippa Billings, Chief Advice Officer, Otivo
When money gets tight, salary sacrifice is often one of the first things people pull back on. It feels like a permanent loss, because the contributions that don't happen this year seem gone for good. For many Australians, they aren't. Since 2018, unused concessional cap space can roll forward for up to five years. Here's what happens to that space when salary sacrifice pauses, who can carry it forward, and the rules that sit around using it later.
If you pause salary sacrifice, the unused part of your concessional contributions cap isn't necessarily lost. As at October 2026, the general cap is $32,500 for 2026–27, according to ATO rules. Members with a total super balance below $500,000 can generally carry unused amounts forward for up to five financial years.
What is the concessional contributions cap in 2026–27?
The concessional contributions cap is a single annual limit on before-tax contributions to super. It's $32,500 for 2026–27. The cap is combined. Employer super guarantee (SG) contributions, salary sacrifice and personal deductible contributions all count towards the same limit.
The cap is indexed to average weekly ordinary time earnings (AWOTE) and only moves in $2,500 steps. That's why it sat at $30,000 for 2024–25 and 2025–26 before stepping up to $32,500.
The $32,500 figure is the general cap, not a ceiling for everyone. Members eligible for carry-forward can have a higher effective cap in a given year.
What happens to unused cap space when salary sacrifice pauses?
When total concessional contributions in a year come in below the cap, the difference is unused cap space. Under the carry-forward rule, eligible members can use that space in a later year.
Take a 38-year-old on $95,000 who has been salary sacrificing $300 a fortnight, about $7,800 a year. If they pause for all of 2026–27, their only concessional contributions are employer SG at 12%, which is $11,400. That leaves $21,100 of unused cap for 2026–27. Rather than disappearing on 30 June 2027, that $21,100 can be available in later years, provided they meet the eligibility conditions in the year they use it.
How carry-forward works
- The rule applies to unused cap amounts from 2018–19 onwards.
- Unused cap amounts can be carried forward for up to five financial years.
- Unused amounts are used oldest first and expire after five years.
Who is eligible to use carried-forward cap space?
All three conditions must be met in the year the carried-forward amount is used.
- Total super balance (TSB) below $500,000 on 30 June of the prior financial year.
- Unused concessional cap space in one or more of the previous five financial years.
- Eligibility to make super contributions, which generally means being under 75. Funds can accept contributions up to 28 days after the end of the month a member turns 75.
The first condition is the one that catches people out. A member who builds up unused space but whose TSB passes $500,000 can't use it while their balance stays above that level.
How do people use carried-forward space later?
Unused cap space can be used through any type of concessional contribution, including restarting or increasing salary sacrifice, or making a personal deductible contribution. A personal deductible contribution is a contribution made in the member's own name that they then claim as a tax deduction.
What is the notice of intent?
To claim a deduction for a personal contribution, the member must lodge a valid notice of intent with their fund. The deadline is the earlier of the day they lodge their tax return for that financial year, or the end of the financial year after the contribution was made. The fund must acknowledge the notice before the deduction can be claimed.
Do age rules apply?
Under 67, personal deductible contributions can be made without meeting a work test. Between 67 and 74, claiming a deduction for personal contributions requires meeting the work test (40 hours of gainful employment in 30 consecutive days) or the work test exemption in the year of the contribution. The work test no longer applies to non-deductible contributions, but it still applies to deductions in this age group.
What else is worth knowing before using a larger cap?
Two rules sit alongside carry-forward. Both matter more when a larger contribution is made in a single year.
What is Division 293 tax?
Division 293 is an extra tax for higher earners. People whose combined income and concessional contributions exceed $250,000 in a financial year pay an additional 15% on concessional contributions above that threshold, bringing the total tax on those contributions to 30% rather than 15%. For this test, income includes taxable income, reportable fringe benefits, net investment losses and the concessional contributions themselves.
A large catch-up contribution can push someone over the threshold in that year. At 30%, concessional contributions still sit below the top marginal tax rate, so they remain concessional for people on that rate.
What happens if contributions go over the cap?
Excess concessional contributions are included in the member's assessable income and taxed at their marginal tax rate, with a 15% tax offset for the tax the fund has already paid. An excess concessional contributions charge also applies. The member can elect to release up to 85% of the excess from their fund.
Frequently asked questions
Can I stop salary sacrifice at any time?
Salary sacrifice is an arrangement with an employer, so how and when it can be changed depends on that arrangement. Many employers allow changes, sometimes with notice.
Does my unused cap expire?
Yes. Each year's unused amount can be carried forward for up to five financial years. After that, it expires.
Where can I see my unused cap amounts?
The ATO shows available carry-forward amounts in ATO online services, under Super, Information, then Carry forward concessional contributions.
Can a financial advisor help with catch-up contributions?
Adviser and advisor are two spellings of the same role. In Australia, only people listed on ASIC's Financial Adviser Register can use the title. Personal advice considers income, balance and retirement plans, which general information like this article doesn't.
Pausing salary sacrifice in a tight year changes the timing of contributions more than it permanently changes what can go into super. Otivo's salary sacrifice advice helps people work out whether putting some salary into super makes sense, considering employer contributions, contribution limits, income and household expenses. Its tax-deductible personal contributions advice considers eligibility and whether claiming a deduction makes sense. Otivo Pty Ltd holds AFSL and Australian Credit Licence No. 485665.
Sources
- Australian Taxation Office, Concessional contributions cap — ato.gov.au
- Australian Taxation Office, Key superannuation rates and thresholds, contributions caps — ato.gov.au
Disclaimer
The information in this communication is current as at October 2026 and has been prepared by Otivo Pty Ltd ABN 47 602 457 732, AFSL and Australian Credit Licence No. 485665. This content is general information only and has been prepared without taking into account your objectives, financial situation or needs. It is not personal financial or taxation advice and should not be relied on as such. Before acting on any information, you should consider its appropriateness having regard to your personal circumstances. This material must not be reproduced in whole or in part, or posted on any social media platform, without the prior written consent of Otivo Pty Ltd.