What are Concessional Contributions for Superannuation?

Concessional contributions for superannuation comprise various types, including employer contributions such as mandatory superannuation guarantee payments and salary sacrifice contributions, as well as personal contributions for which a tax deduction was claimed.

Individuals can contribute up to $27,500 annually in concessional contributions, including employer contributions. Starting from July 1, 2024, this limit will rise to $30,000, with the minimum mandatory employer contribution increasing to 11.5% of ordinary time earnings (currently 11%). Subsequently, from July 1, 2025, the mandatory employer contribution is proposed to be 12%.

From 1 July 2018, if certain requirements are met, individuals can accrue unused yearly amounts of concessional contributions for use in subsequent years. This arrangement is also known as ‘Catch up regime’ and allows individuals to access their unused concessional contributions on a rolling basis for 5 years before they expire.

The following describes the two methods available in making additional concessional contributions to superannuation.

  • Salary Sacrifice Contributions: This involves redirecting a portion of pre-tax salary into a nominated superannuation fund instead of receiving it as part of your take-home pay. This can be established with an agreement between an employer and an employee.
  • Personal Deductible Contributions<: These are made from after-tax funds or funds in a bank account. To claim a tax deduction, a valid Notice of Intent Form must be lodged with the super fund. This form can be obtained from either the super fund or the Australian Taxation Office (ATO). The Notice of Intent Form must be lodged by the earlier of:
    • the day you submit your income tax return for the relevant financial year,
    • the end of the subsequent financial year,

In addition, the Notice of Intent Form must be provided to the superannuation provider before rolling over superannuation benefits to a pension or to another super fund, before paying insurance premiums via partial rollover, or before making a lump sum withdrawal from superannuation. The trustee of the super fund must acknowledge receipt of the Notice of Intent Form before claiming the tax deduction in the tax return.

Individuals aged 67 to 75 at the time of making the contribution must meet the work test if they intend to claim the contribution as a tax deduction. The work test stipulates that individuals must be gainfully employed for at least 40 hours in a continuous 30-day period within the same financial year, to make personal deductible contributions.

Making Personal Deductible Contributions or Salary Sacrifice Contributions to super can be a tax-effective strategy to increase superannuation funds and save you money on tax. Concessional contributions are taxed within superannuation at a rate of up to 15%. If you are a high-income earner, an additional tax of 15% may also be applied to concessional contributions.

Investment earnings are taxed at up to 15% within superannuation.

However, amounts contributed to superannuation will be preserved until certain requirements are met.

The purpose of this website is to provide general information only and the contents of this website do not purport to provide personal financial advice. Denaro Wealth strongly recommends that investors consult a financial adviser prior to making any investment decision. The contents of the Denaro Wealth website does not take into account the investment objectives, financial situation or particular needs of any person and should not be used as the basis for making any financial or other decisions. The information is selective and may not be complete or accurate for your particular purposes and should not be construed as a recommendation to invest in any particular product, investment or security. The information provided on this website is given in good faith and is believed to be accurate at the time of compilation.

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