Contributions made to a superannuation fund may consist of a combination of concessional and non-concessional contributions, both of which are capped by the government. Self managed superannuation fund (SMSF) contributions are governed by the same legislation.

A concessional contribution is a superannuation contribution that occurs prior to any tax being withheld. This includes:

• Employer contributions (including contributions made under a salary sacrifice arrangement), and
• Personal contributions claimed as a tax deduction by an individual.

Concessional contributions are subject to a 15 per cent contributions tax. A non-concessional contribution is a personal contribution for which there is no claimable income tax deduction. Some examples:

• Contributions made after tax has been paid
• Contributions made on behalf of a spouse
• Contributions made in excess of a member’s concessional contributions cap
• Amounts contributed to superannuation from a First Home Savers account

Contributions may be made up to and including age 74, however persons aged 65 years or more must satisfy a work test in order to continue to make contributions.

Members aged less than 65 years are able to bring forward up to two additional years’ non-concessional contributions provided the total amount contributed in the three year period is less than three times the annual cap.

How it works

Age of member on 1 July of relevant financial year	Concessional contributions*	Non-concessional contributions*
Less than 50 years	$25,000	$150,000 or $450,000 aggregated over the next three years
50 to less than 65 years	$50,000 (Transitional cap)	$150,000 or $450,000 aggregated over the next three years
65 to less than 75 years	$50,000 (Transitional cap)	$150,000

*As at 30 June 2010

If the contribution caps are breached, penalties apply. Breaching the concessional cap means excess contributions are counted towards the non-concessional cap and an additional 31.5 per cent tax is payable on this amount. If the non-concessional cap is breached, the excess contributions are subject to 46.5 per cent tax.

This may mean a contribution could be taxed as an excess concessional contribution and then again as an excess non-concessional contribution if the excess concessional contribution is large enough to also cause the non-concessional cap to be breached.


Disclaimer: The information contained in this document is given in good faith and has been prepared from information believed to be accurate and reliable. This information is of general nature only and based on Multiport’s interpretation of the present laws but no guarantee is provided. This document is not designed to be a substitute for financial or investment advice and should not be relied upon as such. Reproduction of material in this document is only permitted with approval of the author.