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When it comes to building a retirement nest egg, most people realise their employer is doing the bulk of the heavy lifting through their regular Superannuation Guarantee (SG) contributions.
But that’s not the only way to build up your super balance. You can also make contributions into your super account from your take-home pay or savings outside the super system.
If you’re interested in learning more about how to boost your retirement savings through personal super contributions, SuperGuide has prepared this simple guide to non-concessional contributions.
What is a non-concessional super contribution?
For most employees, their employer’s SG contributions are part of their salary package and they are made from money that has not yet been taxed. When this money goes into your super account, it’s taxed concessionally at the special low rate of 15% (the contributions tax).
On the other hand, if you decide to make personal contributions into your super account, they can come from money that has already been taxed at your normal tax rate. These contributions are called non-concessional (or after-tax) contributions because tax has already been paid or deducted from the money you use to make the contribution.
You can also make personal contributions that are concessional by salary sacrificing or claiming a tax deduction for your personal contributions.
What types of contributions are non-concessional?
From 1 July 2017, there are several types of non-concessional (after-tax) contributions:
- Personal contributions you make and don’t claim as a tax deduction in your income tax return. These are often called ‘voluntary’ contributions and can be either a large lump sum or small regular amounts from your wages or salary.
- Contributions you or your employer make from your after-tax income.
- Spouse contributions are made by you into your spouse’s super account or by your spouse into your account. This can be a tax-effective way for a couple to save for retirement if one partner is only working part time or has a low income. Learn about spouse contributions.
- Excess concessional (before-tax) contributions you have not released from your super fund.
- Retirement benefits you withdraw from your super and recontribute, for which you have not claimed a tax deduction. Learn about recontribution strategies.
What is the non-concessional contributions cap?
There are annual caps (or limits) on the amount of non-concessional contributions you can make into your super account. This annual cap increases in line with indexation of the concessional (before-tax) contributions cap.
The general annual cap for non-concessional contributions for 2023–24 is $110,000.
Your individual non-concessional cap may be different from the general annual non-concessional contributions cap. It can be higher if you use a bring-forward arrangement, or nil if your Total Superannuation Balance (TSB) is greater than or equal to the general transfer balance cap ($1.9 million in 2023–24). For more details, see the bring-forward section later in the article.
Non-concessional contributions caps in the current and previous financial years
|Amount of cap*
*These caps are subject to any bring-forward arrangements commenced in early years.
Three types of contributions don’t count towards your annual non-concessional contributions cap:
- Personal injury payments
- Contributions you chose to count towards your capital gains tax cap that don’t exceed your lifetime limit. (Learn about the small business retirement exemption.)
- Downsizer contributions from selling your home. (Learn about downsizer contributions.)
These contributions are only excluded if you meet all the conditions and specifically ask your fund to exclude them by providing the necessary paperwork.
5 reasons non-concessional contributions are valuable
1. No contributions tax
When you make non-concessional contributions with your after-tax money, there is no 15% contributions tax payable as they enter the super system.
2. Lower tax on investment earnings
The tax rate on any investment earnings in your super account is a maximum of 15%, which is often a lot lower than the tax rate on your investment earnings outside the super system.
3. Tax-free withdrawal
When you receive your super savings in retirement, your non-concessional contributions are returned to you tax free.
4. Higher contributions cap
The non-concessional contributions cap ($110,000 in 2023–24) is much higher than the concessional contributions cap ($27,500 in 2023–24), which means you can add more to your retirement nest egg.
5. Potential government co-contribution payment
If you are a low or middle-income earner and make a personal after-tax contribution, you may qualify for a co-contribution payment of up to $500 from the government. To be eligible, you must not have exceeded your non-concessional contributions cap in the relevant financial year.
Am I eligible to make non-concessional contributions?
To make a non-concessional contribution into your super account, you must meet several eligibility criteria:
1. Total Superannuation Balance limit
You must have a Total Superannuation Balance (TSB) of less than the general Transfer Balance Cap ($1.9 million in 2023–24) on 30 June of the previous financial year. You also need to have available space under your non-concessional contributions cap based on the contributions you have made in previous years (see bring-forward section below).
2. Age limit and work test
From 1 July 2022, if you are aged under 75 you are eligible to make a non-concessional contribution even if you are not working.
Your fund may also be able to accept contributions until 28 days after the end of the month you turned 75, but it’s better not to leave your contribution until the last minute!
3. Annual contribution limits
The general annual non-concessional contributions cap is $110,000 (in 2023–24).
Despite this general non-concessional contributions cap, your personal annual non-concessional contributions cap may be different and may even be nil (see table below).
Where you meet all the eligibility conditions, you may be eligible to bring forward up to two additional years of non-concessional contributions caps so you can make a higher contribution in a single year (currently up to $330,000 in one year). The amount you can contribute depends on your Total Superannuation Balance.
Annual contribution limits for non-concessional contributions using a bring-forward arrangement
|Total Superannuation Balance at 30 June of the prior financial year
|Maximum contribution you can make
|Accounts for contribution caps in
|$0 to less than $1.68 million
|Current year + following 2 years
|$1.68 to less than $1.79 million
|Current year + following year
|$1.79 million to less than $1.9 million
|$1.9 million and over
How do I make a non-concessional contribution?
Making a non-concessional contribution is easy, with most super funds allowing you to make them using payment systems like cheque, BPAY or electronic funds transfer.
You can make a non-concessional contribution as a single lump sum or as lots of smaller contributions throughout the year – it’s up to you.
You don’t need to notify the ATO you are making a non-concessional contribution, since most super funds usually assume voluntary member contributions are non-concessional unless you inform them otherwise.