Concessional Vs. Non-Concessional Super Contributions

Contributions you make into super are classified for tax purposes as either concessional or non-concessional.

These are before tax employer contributions to super and include compulsory employer contributions and salary sacrifice. If you are self-employed, these are the contributions you are able to claim as a tax deduction.

However, you need to be aware that there is a limit of $25,000 that you can make in concessional contributions each financial year.

What happens if I go over the limit?

You will have to pay additional tax of 31.5% of the contribution amount over the limit.

Source: ATO

Who pays the tax on concessional contributions – me or the super?

The Fund pays 15% tax on the contribution.  However, if you are over the limit, you will be required to pay tax on the excess of 31.5%.

These are post-tax or after-tax contributions (ie. money you have put into your super on which you have already paid tax).

What about the limit?

The limit is $150,000 ( six times the concessional contributions limit); and if you are under 65 you can ‘bring forward’ up to 3 years-worth of limits into one year.

Note : any contributions made over the concessional contributions limit will count towards the non-concessional contributions limit!

Source: ATO

What if I go over the limit?

You have to pay tax at 46.5% of the amount over the limit.

Who pays the tax?

You’ve already paid the tax on the non-concessional contribution so the Super Fund doesn’t pay any tax.  If you are over the non-concessional limit though, you’ll pay 46.5% tax on the excess.

Source: ATO

If you go over both limits, you could end up paying tax of up to 93% of the excess.

Here is an example from the ATO:

You salary sacrifice $20,000 and your employer pays a compulsory super contribution of $10,000. You sell a property and make a $450,000 non-concessional (after-tax) contribution.

Concessional Contributions
Salary Sacrifice	20,000
Employer Contributions	10,000
Total	30,000
Limit	25,000
Excess	5,000
Tax Payable On Excess (31.5% + 15%)	2,325
Non-Concessional Contributions
After-tax contribution from sale of property	450,000
Concessional excess	5,000
Total	455,000
Limit (Bring forward 3 years of limits)	450,000
Total Excess	5,000
Tax Payable on Excess (46.5%)	2,325
Total Tax Payable	4,650
% of Excess	93.0%

So you will pay 93% of the amount in excess of both in tax!