Q: I have a query regarding superannuation accounts. When I receive payments from an account-based pension, I know I can put some back to my accumulation account. How is the amount put back treated? Is it a non-concessional or a concessional contribution?
A: With this one, it’s really best just to take a step back and look at what the general contribution rules are. The first fundamental rule around personal super contributions, so they are contributions made by the individual, not by an employer, but by a member, an individual, is that all personal contributions that are made to a fund are treated as non-concessional contributions.
So, all member contributions go in and should be treated as non-concessional contributions until the member informs the trustee that they’re claiming a tax deduction for it, or informs the trustee that it is a concessional contribution by lodging the required form that the fund might have, or that the ATO has. So, all personal contributions going in are non-concessional, and then we change them if we need to concessional, if we’re claiming a tax reduction for those concessional contributions.
If the tax deduction is being claimed by the member making contribution, and the member informs the fund that they’re making or claiming their deduction, then it’s treated at that point as a concessional contribution. If not, it’s a non-concessional contribution. Why I just raise that is I assume what you’re looking at here in your question is what we often refer to as a bit of a recontribution strategy.
With the recontribution strategy, money coming out of super that you want to put back in is usually done as a non-concessional contribution. But just to be clear, if eligible, you could claim a tax reduction and therefore, by lodging that form with the fund, it makes it a concessional contribution.
Again, there’s some good information, some resources, some articles around the different types of contributions. So, for the current 2023 financial year, don’t forget, there’s the guides which get released on 1 July for the non-concessional and concessional contributions guide. Have a look at those. It certainly will give you some more information there.