Concessional and Non-Concessional Super Contributions Explained

Concessional and Non-Concessional Super Contributions Explained

When it comes to growing your superannuation savings, there are two main types of contributions: concessional and non-concessional. Understanding the difference can help you make the most of your retirement savings.

Concessional Contributions

Concessional contributions are made before tax and include employer contributions (such as the Superannuation Guarantee), salary sacrifice contributions, and personal contributions you claim as a tax deduction. These contributions are taxed at 15% within your super fund, which is usually lower than most people’s income tax rate. However, there is an annual limit of $30,000, and contributions above this cap may be taxed at a higher rate.

Non-Concessional Contributions

Non-concessional contributions are made from your after-tax income. They are not taxed within the fund because you’ve already paid tax on this money. These contributions are capped at $120,000 per year, but if you’re under 75, you may be able to bring forward up to three years’ worth of contributions, allowing up to $360,000 in a single year.

Choosing the right mix of concessional and non-concessional contributions can help you maximise your tax benefits and grow your retirement savings. It’s always a good idea to seek professional advice to ensure you stay within the contribution limits and make the most of your super strategy.