Making additional contributions can be a great way to help reach your retirement goals sooner, however going over the contribution limits can mean you have to pay extra tax.
Examples of concessional contributions include:
- Employer contributions such as Superannuation Guarantee;
- Salary sacrifice contributions; and
- Personal contributions claimed as a tax deduction.
Concessional contributions are taxed at 15% when they enter the fund, unless your annual income (including concessional super contributions) exceeds the threshold in which case they will be taxed at 30%. From 1 July 2017 this threshold was reduced to $250,000.
Concessional contributions are subject to a yearly limit. For 2018-2019, the concessional contributions limit is $25,000. If you exceed your concessional contributions limit, you may have to pay additional tax. For more information about the concessional contributions limit, please read the Contributions Fact Sheet or visit the Australian Taxation Office (ATO) website.
Non-concessional contributions are contributions that are made after tax. Examples of non-concessional contributions include:
- Personal contributions (where no tax deduction has been claimed)
- Spouse contributions; and
- Excess concessional contributions
They are subject to a yearly limit, which for 2018-2019 is $100,000. If your super accounts (across all funds) exceed $1.6 million (indexed with CPI) at the previous 30 June, you will not be able to make any further non-concessional contributions. If you exceed your non-concessional contributions limit, you will be able to withdraw any excess non-concessional contributions or keep them in your super account and have a higher rate of tax applied.1
Contributions Fact Sheet 201.16 KB PDFDownload
1 This applies to contributions made from the 2013/14 financial year onwards, plus associated earnings. Individuals who have made excess non-concessional contributions have the option to either:
a. Withdraw excess non-concessional contributions and 85% of the earnings. These earnings will then be included in your income tax assessment; or
b. Keep the excess non-concessional contributions in their super account and they will be taxed at the top marginal tax rate (49%).