Before-tax (concessional) contributions
Before-tax contributions are often referred to as ‘concessional contributions’ while after-tax contributions are sometimes referred to as ‘non-concessional contributions’. They are both taxed differently.
Concessional contributions include compulsory Super Guarantee contributions made by your employer and your salary sacrifice contributions. If you make personal contributions to your fund from your after-tax income and then claim the contributions as a tax deduction, these will also be converted into concessional contributions.
For more information on super tax concessions, download our factsheet.
Salary sacrifice for your super
You can talk to your employer about forgoing some of your salary to make extra contributions to your super account instead of being part of your take home pay. This can have tax advantages as the standard 15 per cent tax on super contributions may be less than what that money would have been taxed if it was in your take-home pay. To find out more, contact your fund or visit the Australian Taxation Office webpage about salary sacrificing.
Tax deductions for your super
If your employer does not offer salary sacrifice, or you prefer not to enter into an ongoing salary sacrifice arrangement, you may be able to claim a tax deduction for personal contributions that you made for yourself out of your after-tax income.
From 1 July 2017 the super laws changed to allow more people to claim a tax deduction for their contributions, even if they have an employer who is already making Super Guarantee contributions for them.
If you claim a tax deduction for your personal contribution, you need to be aware that it will change from an after-tax (non-concessional) contribution to a before-tax (concessional) contribution and will be counted against your concessional contributions cap for the year.
Before you can claim a deduction you must give your fund a notice in a special format and within a strict deadline. Some other conditions also apply – for more information, visit the ATO website or contact your fund.
Contribution caps for super
A ‘contributions cap’ is the maximum amount you can contribute to your super each financial year. If you contribute above the cap, you may have to pay extra tax. The cap amount and the extra tax you need to pay depend on whether the contributions are concessional (before-tax) or non-concessional (after-tax). For more information, see our Contribution caps page.