What Are Concessional Contributions?

What Are Concessional Contributions?

Concessional contributions are an effective way to grow your superannuation while taking advantage of tax benefits. These contributions are made into your super fund before tax is applied, helping you save for retirement while reducing your taxable income.

Types of Concessional Contributions

1. Employer Contributions: These include the Superannuation Guarantee (currently 11.5%, increasing to 12% from 1 July 2025) that your employer must pay into your super fund.
2. Salary Sacrifice: You can arrange with your employer to have a portion of your pre-tax salary paid directly into your super. This reduces your taxable income and can increase your retirement savings.
3. Personal Deductible Contributions: If you’re self-employed or want to make extra contributions, you can add to your super and claim a tax deduction for these amounts.

Tax Treatment

Concessional contributions are taxed at 15% within your super fund, which is often lower than your marginal tax rate. However, high-income earners (those earning more than $250,000 annually) may pay an additional 15% tax on these contributions.

Contribution Caps

The annual cap for concessional contributions is $30,000. Exceeding this limit may result in additional taxes, so it’s important to track your contributions.

Benefits of Concessional Contributions

• Tax Savings: By contributing before tax, you reduce your taxable income.
• Boost Your Retirement Savings: Consistent contributions can significantly increase your super balance over time.

You need to know that, under most circumstances, you cannot withdraw money from your super until you retire.

To make the most of concessional contributions, consider speaking with a financial adviser or your accountant to ensure your contributions align with your financial goals and stay within the caps.