In this guide
For most Aussies, concessional contributions are the most common type of contributions appearing on their annual super fund statement, as they are the ones made by employers on their behalf.
Despite this, many people still don’t understand what concessional contributions are, or the role they play when it comes to saving for your retirement.
To help you learn more about these important super contributions, SuperGuide has put together this comprehensive guide.
What is a concessional super contribution?
Concessional contributions are any of the contributions paid into your super account that receive a concessional (or lower) tax rate. As they are made from money that has not yet been taxed, concessional contributions are sometimes referred to as being before-tax contributions.
Concessional super contributions are generally taxed at the special low rate of 15% (if your income plus concessional contributions is under $250,000) to help you save for your retirement. For many people, this tax rate is lower than the marginal or top tax rate they pay on their income.
If you make concessional contributions to an untaxed (constitutionally protected) super fund for government employees, no tax is deducted from your concessional contributions. You will instead pay tax when you withdraw your super after retirement. You may still be liable for Division 293 tax on your super contributions if you have high income.
Need to know: If your income plus any concessional (before-tax) super contributions totals more than $250,000 in a particular financial year, you will be liable for additional tax of 15% on your concessional contributions above this threshold.
This Division 293 tax is payable in addition to the normal 15% contributions tax you pay when your concessional contributions enter your super account.
Learn about the Division 293 tax.
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