Maximum Contribution Base

What is the Maximum Contribution Base (MCB)

The Maximum Contribution Base (MCB) is the earnings threshold above which an employer is not required to pay the superannuation guarantee (SG) on an employee's wages. It sets a cap on the amount of earnings used to calculate compulsory super contributions, meaning employers have no obligation to pay SG on the portion of an employee's income that exceeds the MCB.

The MCB is set by the Australian Taxation Office (ATO) and is adjusted periodically in line with average weekly ordinary time earnings (AWOTE). Under the payday super reforms taking effect from 1 July 2026, the MCB is changing from a quarterly calculation to an annual figure, with an expected value of $250,000 for the 2026-27 financial year.

The role of the MCB in employment

For both employers and employees, the MCB is an important threshold in understanding superannuation obligations:

• For employers: The MCB limits the earnings base on which the SG must be calculated. For employees whose earnings exceed the threshold, employers are not required to make SG contributions on the excess amount. Under the payday super framework, this calculation shifts from quarterly to annual, which chanes how the threshold applies across a financial year, particularly for employees with variable or uneven earnings.
• For employees: Employees earning above the MCB will not receive SG contributions on earnings beyond the threshold. High-income earners or those with variable income, such as commission-based staff, should factor this into their superannuation planning.

How the MCB is changing under payday super

Under the current quarterly system, the MCB applies per quarter. This means an employee earning significantly more in one quarter than another may have their SG contributions capped differently across the year.

Under the payday super framework from 1 July 2026, the MCB moves to an annual calculation, expected to be set at $250,000 for FY2027. This change simplifies the calculation in some respects but introduces new considerations for employees with variable earnings, as the annual threshold will apply across the full financial year rather than being reset each quarter.

Employer obligations regarding the MCB

Applying the correct threshold: Employers must ensure their payroll system correctly applies the MCB when calculating SG contributions. Under the annual model, payroll software will need to track cumulative earnings across the full financial year rather than resetting the cap each quarter.

Staying up to date: The MCB is subject to change each financial year. Employers should confirm the current MCB figure with the ATO or their payroll provider at the start of each financial year.

How Microkeeper manages the MCB

Microkeeper's payroll software is being updated to reflect the annual Maximum Contribution Base calculation in line with the ATO's payday super requirements:

• Automated calculation: Microkeeper automatically applies the MCB when calculating SG contributions during each pay run, ensuring the correct amount is calculated without manual intervention.
• Annual threshold tracking: Under the payday super framework, Microkeeper will track cumulative earnings across the financial year to correctly apply the annual MCB, ensuring compliance with the updated calculation methodology.
• ATO alignment: MCB figures are updated in line with ATO guidance at the start of each financial year, so employers always have the correct threshold applied in their pay runs.

FAQs about the Maximum Contribution Base

Does the MCB mean I don't have to pay super for high-earning employees?

Not entirely. The MCB only limits the earnings base on which SG contributions are calculated, it does not eliminate the SG obligation altogether. You are still required to pay super on the portion of earnings up to the MCB threshold.

How does the shift to an annual MCB affect my payroll?

For most businesses, the practical impact is minimal. However, if you have employees with variable earnings, particularly those who earn significantly more in some periods than others, the shift to an annual calculation may affect how much SG you are obligated to contribute at different points in the year. Your payroll software should manage this automatically.

What is the MCB for FY2027?

The MCB for the 2026–27 financial year is expected to be $250,000 annually under the payday super framework. This figure is subject to confirmation by the ATO ahead of the 1 July 2026 commencement date.

Does the MCB apply to salary sacrifice contributions?

The MCB applies to the SG, the compulsory employer contribution. Salary sacrifice arrangements are separate and subject to different rules, including the concessional contributions cap. Employees with salary sacrifice arrangements should seek independent financial advice regarding how the MCB interacts with their overall super strategy.

Best Practices for MCB Management

Confirm the current MCB each financial year: Check the ATO's published MCB figure at the start of each year to ensure your payroll system is applying the correct threshold.

Use payroll software that automates the calculation: Manual MCB calculations are error-prone, particularly under the annual model. Payroll software that tracks cumulative earnings and applies the threshold automatically reduces compliance risk.

Review high-income and variable-income employees: Employees whose earnings are close to or above the MCB, particularly those on commission, bonuses, or variable pay, are most likely to be affected by the threshold. Review their payroll configuration before payday super commences.