Ruqayyah Snyder
Concessional contributions are a type of payment made into an Australian superannuation fund before tax. They are often called pre-tax super contributions and are taxed at a concessional rate of 15%, which is lower than the lowest income tax rate of 16%. The concessional contributions cap for the 2025-26 financial year is $30,000, and individuals can carry forward unused amounts from up to five previous financial years. Making concessional contributions can be a tax-smart way to build wealth and boost retirement savings.
| Characteristics | Values |
|---|---|
| What are concessional contributions? | Concessional contributions are payments made into your super before tax. |
| How are they taxed? | Concessional contributions are taxed at 15%. |
| Who makes concessional contributions? | Your employer makes concessional contributions. You can also make concessional contributions by claiming a tax deduction on your after-tax contributions. |
| What is the concessional contributions cap? | The concessional contributions cap for the 2025-26 financial year is $30,000. |
| Can I carry forward unused concessional contributions? | Yes, you can carry forward unused concessional contributions for up to 5 years if your super balance is less than $500,000 at the end of the previous financial year. |
| How to make concessional contributions? | You can make concessional contributions by salary sacrificing, or by making personal contributions and claiming a tax deduction. |
| Who is eligible for concessional contributions? | Anyone can make concessional contributions, but eligibility for tax deductions on personal contributions depends on age and income. |
| How do concessional contributions affect my tax? | Concessional contributions are taxed at a lower rate than your income tax rate, so they can reduce your overall tax liability. |
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What You'll Learn
Understand concessional contribution caps
Concessional contributions are payments made into your super fund before tax. They are often called pre-tax super contributions. The concessional rate of tax paid on super is 15%, which is less than the lowest income tax rate of 16%. For the 2025-26 financial year, the concessional contributions cap is $30,000. If you haven't met the contribution cap in a financial year, you can carry the unused amount forward to the next year. You can carry forward any unused amounts from up to five previous financial years. This lets you take advantage of the low tax rates for super contributions.
To be eligible to carry forward unused concessional contributions, your super balance must be less than $500,000 at 30 June of the previous financial year. If you exceed your concessional contributions cap, the excess concessional contributions (ECC) are included in your assessable income. Any ECC you don't elect to have released will count towards your non-concessional contributions cap.
Concessional contributions include the payments your employer makes into your superannuation. They also include any super you salary sacrifice or any super contribution you've made and claimed a tax deduction for. If you claim a tax deduction for your personal super contributions, they are classed as concessional contributions. They are taxed in the fund at a rate of 15%.
If you are a member of a self-managed superannuation fund (SMSF), you may be able to make a concessional contribution in one financial year and have it count towards your concessional contributions cap in the following financial year.
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Claiming a tax deduction
To claim a tax deduction for your concessional contributions, you must give your super fund a notice in the approved form and get an acknowledgment from the fund. You can also notify your super fund using the claim form from the ATO. If you are eligible, the amount allowed as a deduction is included in your concessional contributions cap.
It is important to be aware of your concessional contributions cap and your total super balance. Concessional contributions made to all your funds during a financial year are added together and counted towards your cap. If you exceed your cap, you will have to pay extra tax, and any excess concessional contributions left in your super will count towards your non-concessional contributions cap.
If you claim a tax deduction for after-tax contributions, they will be classed as concessional contributions and will no longer qualify for the government co-contribution. The government co-contribution scheme matches up to 50 cents for every dollar you contribute to your super from your after-tax pay, up to $1,000 per annum.
From 1 July 2022, you can make or receive non-concessional personal and salary sacrifice contributions without meeting the work test (or exemption). However, you must still meet the work test to claim a deduction for personal superannuation contributions so they are treated as concessional contributions. If you are under 18 years old at the end of the income year in which you made the contribution, you can only claim a deduction if you earned income as an employee or business operator during the year.
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Salary sacrifice contributions
You and your employer can agree on a salary sacrifice arrangement to exchange part of your salary or wages for benefits of a similar value. You can use a salary sacrifice arrangement to have some of your salary or wages paid into your super fund instead of to you. This effectively reduces your taxable income, meaning you pay less tax on your income. These concessional contributions are taxed in the super fund at a rate of 15%, which is generally less than your marginal tax rate.
If your income and concessional contributions total more than $250,000, you may have to pay an additional 15% tax on some or all of your concessional contributions. The additional tax is applicable to the portion of pre-tax contributions that is above the threshold.
If you decide that making salary sacrifice contributions to your super is right for you, it’s easy to set up. Have a chat with your employer’s payroll team and confirm that your workplace offers this scheme. Once you’ve decided on the amount you’d like to salary sacrifice and how often, you and your employer must sign a document that states the terms of the agreement.
Consider getting financial advice before deciding if a salary sacrifice arrangement is right for you. The government limits the amounts you can contribute to super before and after tax. If you go over the limits, you may pay extra tax.
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Personal super contributions
To claim a deduction for your personal super contributions, you must give your super fund a notice in the approved form and get an acknowledgment from the fund. Deductible personal contributions count towards your reportable super contributions. For example, if Christie earned $35,000 in assessable income, she could contribute $5,000 to her super fund as a personal contribution. If she wanted to claim an income tax deduction for the entire super contribution, she would need to give her fund a notice of intent and get an acknowledgment. After this, Christie could claim a tax deduction of $5,000, reducing her taxable income to $30,000. However, her fund would pay 15% tax on the $5,000, so only $4,250 would be credited to Christie's super fund account.
If you are eligible to claim a tax deduction for your personal super contributions, the amount allowed as a deduction is included in your concessional contributions cap. Your employer can make super guarantee contributions for the quarter ending on 30 June by 28 July in the next financial year. If you have a salary sacrifice contributions agreement with your employer, and you want your fund to receive them by 30 June, ensure your employer includes this in the agreement.
If you are a member of a self-managed superannuation fund (SMSF), you may be able to make a concessional contribution in one financial year and have it count towards your concessional contributions cap in the following financial year. You can also carry forward unused cap amounts from previous years. However, be aware that if you exceed your concessional contributions cap, the excess concessional contributions (ECC) are included in your assessable income.
When deciding whether to claim a deduction for super contributions, consider the possible impacts, including whether you will exceed your concessional contributions cap, whether you will have to pay Division 293 tax, whether you wish to split your contributions with your spouse, and whether it will affect your super co-contribution eligibility.
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After-tax contributions
If you are a low- to middle-income earner and make after-tax super contributions, you may be eligible for a matching contribution from the government, called a co-contribution. The government will match up to 50 cents for every dollar you contribute to your super from your after-tax pay, up to $1,000 per year. The maximum benefit is a $500 co-contribution, which is paid directly into your super fund after you lodge your tax return for that year.
If you claim a tax deduction for after-tax contributions, they will be classed as concessional contributions and will no longer be eligible for the government co-contribution. Concessional contributions are taxed at a rate of 15%, which is usually lower than the tax you pay on your income.
You can make up to $120,000 in non-concessional contributions each financial year. However, if you are under 75, you may be able to bring forward up to three years' worth of contributions, allowing you to contribute up to $360,000 in one financial year.
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Frequently asked questions
Concessional contributions are payments made into your super fund before tax. They are taxed at a concessional rate of 15%, which is lower than the lowest income tax rate of 16%.
You can make concessional contributions by claiming a tax deduction on your personal super contributions. This converts your after-tax contributions to concessional contributions. You must notify your super fund using a claim form from the ATO.
The limit for concessional contributions is $30,000 for the 2025-26 financial year. If you haven't met this cap, you can carry forward the unused amount to the next year, for up to five previous financial years.
Concessional contributions are often a tax-smart way to save for retirement. However, if you exceed the concessional contributions cap, you will have to pay extra tax. Non-concessional contributions are made from your after-tax pay, so you may prefer this option if you are close to your concessional cap or want to avoid additional taxes.
