What is the difference between concessional and non-concessional superannuation contributions?

This article delves into the two main types of super contributions: concessional and non-concessional.

Concessional Contributions: Tax-Advantaged Growth

Concessional contributions are made from your pre-tax income. This means the money is deducted from your salary before income tax is applied. There are two main ways to make concessional contributions:

  • Employer contributions: Your employer is legally obligated to contribute a minimum percentage (currently 9.5%, rising to 12% by 2025) of your ordinary time earnings into your super fund.
  • Salary sacrifice: This involves agreeing to reduce your pre-tax salary and have the difference contributed to your super. This lowers your taxable income and can potentially place you in a lower tax bracket.

Tax Benefits of Concessional Contributions:

  • Concessional tax rate: The contributions are taxed at a maximum rate of 15% within the super fund, which is typically lower than your marginal tax rate. This provides a tax benefit for growing your retirement savings.
  • Tax deductions: Self-employed individuals and some employees can claim a tax deduction for personal concessional contributions made to their super fund.

Important Considerations for Concessional Contributions:

  • Caps: There is a concessional contributions cap per financial year, which is currently $27,500 (including employer contributions). Exceeding this cap may result in additional tax implications.
  • Eligibility: The concessional tax treatment may not apply to everyone, particularly high-income earners exceeding $250,000 per year.

Non-Concessional Contributions: Boosting Your Super with After-Tax Dollars

Non-concessional contributions are made from your after-tax income. You’ve already paid income tax on this money before contributing it to your super.

Scenarios for Making Non-Concessional Contributions:

  • Individuals with large lump sums: This could be from inheritances, bonuses, or redundancy payouts.
  • Catching up for lost super: If you’ve changed careers or taken time off work, you may want to use non-concessional contributions to boost your super balance.
  • Maximizing super benefits: Approaching retirement and nearing contribution caps may make non-concessional contributions a strategic option.

Tax Implications of Non-Concessional Contributions:

  • No tax deduction: Unlike concessional contributions, you cannot claim a tax deduction for non-concessional contributions.
  • Tax-free within the fund: The contributions themselves are not taxed upon entering the super fund.

Important Considerations for Non-Concessional Contributions:

  • Caps: There is a non-concessional contributions cap per financial year, which is currently $110,000 (with some exceptions for individuals aged 50 or over).
  • Total super balance cap: There are also caps on your total superannuation balance which can impact eligibility for non-concessional contributions.

Choosing the Right Mix:

The optimal strategy for super contributions depends on your individual circumstances. Here are some factors to consider:

  • Your income level: If you’re in a high tax bracket, concessional contributions offer a greater tax benefit.
  • Your age: Younger individuals have a longer time horizon for their super to grow, so maximizing concessional contributions may be more relevant.
  • Your retirement goals: Those with ambitious retirement goals may consider utilizing both contribution types.

Seeking Professional Advice:

Superannuation regulations can be complex. Consulting a financial advisor can help you understand your eligibility, contribution caps, and develop a personalized strategy to optimize your super savings for a secure retirement.


Understanding concessional and non-concessional super contributions empowers you to make informed decisions about your retirement savings. By considering the tax benefits, contribution caps, and your personal circumstances, you can leverage these tools to build a comfortable future. Remember, seeking guidance from a qualified professional can ensure you navigate the super landscape effectively.


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