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What Are Concessional Super Contributions?

Concessional contributions are contributions made to superannuation before tax. Concessional contributions typically arise from employer superannuation guarantee (SG) contributions and salary sacrifice arrangements. Self-employed people can also make concessional contributions to super, for which they can claim a tax deduction.

For example, John earns $100,000 and his employer pays an additional 10% ($10,000) of his wage to his superannuation fund. John is not personally taxed on the extra $10,000, but the government will tax the contributions going into his superannuation fund at a reduced amount (e.g. 15%).

They are called ‘concessional’ contributions because the contributions are made directly to superannuation before the employee receives their net pay and they attract a ‘concessional’ rate of tax going into the fund.

For example, John might have a 37% marginal tax rate, but his employer’s concessional contributions into the fund are taxed at only 15%.

There are yearly caps in place which determine how much can be contributed to superannuation before tax. Anything above this amount attracts additional tax — it hurts, a lot. 

High-income earners — e.g. those earning more than $300,000 — may pay more tax for concessional contributions than the rest of us, common folk.

Individuals can also make after tax contributions to super, called non-concessional contributions.

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