Pre-tax contributions made to superannuation, including employer contributions and salary sacrifice amounts, taxed at 15% in the super fund. Annual caps apply, with excess contributions taxed at higher rates.
Concessional contributions are pre-tax super contributions taxed at 15% in the fund rather than at your marginal rate. They include employer Super Guarantee (SG), salary sacrifice, and personal contributions you claim as a tax deduction.
For 2023-24 the annual cap is $27,500. Exceeding the cap brings excess contributions back into your assessable income, removing the concessional treatment.
| Contribution type | Counts toward cap? | |---|---| | Employer SG (compulsory) | Yes | | Salary sacrifice contributions | Yes | | Personal contributions you claim a deduction for | Yes | | Personal contributions you don't claim | No (these are non-concessional) | | Spouse contributions | No (non-concessional) | | Government co-contribution | No |
| Your taxable income | Effective tax on concessional contributions | |---|---| | Up to $250,000 | 15% in the fund | | Over $250,000 | 15% in the fund + 15% Division 293 = 30% total |
Division 293 tax is an additional 15% levy on concessional contributions for high-income earners, payable personally rather than from the fund unless you elect a release.
If your total super balance is under $500,000 at the previous 30 June, you can use unused concessional cap amounts from the prior 5 financial years. This lets you make a larger one-off contribution after a windfall or capital gain.
Compare this to paying $1,200 of retail premium from after-tax salary at a 37% marginal rate: you would need to earn roughly $1,905 of gross salary, so the super route saves around $700.
James earns $110,000 and receives $10,450 in employer SG contributions. He salary sacrifices $12,000 for additional super and $2,000 for insurance premiums, totaling $24,450 in concessional contributions, within the $27,500 cap.
Sarah earns $180,000 with $17,100 employer SG. She salary sacrifices $10,400 to max out her $27,500 cap. Her super fund then deducts $1,200 in insurance premiums from her balance, funded by these concessional contributions taxed at 15%.
Michael exceeds the $27,500 cap with $32,000 in concessional contributions. The excess $4,500 is included in his assessable income, taxed at his 37% marginal rate (instead of 15%), and he pays an excess concessional contributions charge, resulting in approximately $1,980 in additional tax.
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