Concessional vs Non-Concessional Contributions

Every super contribution is one of two types, and the type decides how it's taxed on the way in and how much you can put in.

Concessional means before-tax money going into super; non-concessional means money you've already paid tax on. Get the labels right and super is a well-sheltered place to build wealth. Get them wrong and you're untangling 'excess contribution' letters from the tax office. Here's the plain-language version for FY2025-26.

Concessional contributions are dollars that haven't been income-taxed yet: the compulsory 12% super your employer must pay, salary sacrifice (salary paid straight into super instead of your bank account), and personal top-ups you claim a tax deduction for.

Instead of your marginal rate — the tax rate on the last dollar you earn — these dollars pay a flat 15% tax on the way into the fund. In the 30% bracket or above, that's a serious markdown.

The cap is $30,000 a year for FY2025-26 — and your employer's contributions eat into it, so check your payslip before topping up.

Non-concessional contributions come from money the tax office has already taxed — savings, an inheritance, sale proceeds — so the fund charges nothing on the way in.

The cap is $120,000 a year. If you're under 75 and your total super balance allows it, you can 'bring forward' up to three years of caps and drop in $360,000 in one hit — handy when a windfall lands.

There's no deduction, but earnings inside super are taxed at 15% tops — usually far less than the same investments would pay sitting in your own name.

Didn't fill your $30,000 before-tax cap in past years? The leftover space carries forward for up to five years before expiring.

One condition: your total super balance must have been under $500,000 on 30 June of the previous financial year.

It's most useful in a spike-income year. Sell an investment property with a big capital gain — the profit from selling something for more than you paid — and a fat catch-up contribution can knock a real chunk off the bill.

Division 293 is an extra 15% tax on super contributions for people earning over $250,000. Once your income plus your before-tax contributions passes that line, it hits some or all of those contributions.

That lifts the entry tax to 30% — still comfortably better than the 47% (Medicare levy included) a top-bracket salary pays, just a thinner win.

You don't have to do anything: the ATO works it out after you lodge your tax return, and you can have your super fund pay the bill.

Earning solid income and want a tax deduction now? Concessional first — the flat 15% beats most people's normal tax rate.

Cap already full, or holding a lump of already-taxed money you want invested for the long haul? Non-concessional gets it into super's low-tax environment.