Concessional super contributions are payments put into your super fund from your pre-tax income. Concessional super contributions are tax deductible to the contributor and are taxed at 15% when they are received by your super fund. They include:
- Employer super guarantee contributions (including contributions made under a salary sacrifice arrangement)
- Personal contributions claimed as a tax deduction.
The tax advantages that concessional contributions provide is limited subject to an annual cap. From 1 July 2017, the general concessional contributions cap is $25,000 for all individuals regardless of age, and has since increased to $27,500 from 1 July 2021.
From 1 July 2018, members can make ‘carry-forward’ concessional super contributions. The carry forward rule allows individuals to make additional concessional contributions in a financial year by utilising unused concessional contribution cap amounts from up to five previous financial years, providing their total superannuation balance just before the start of that financial year was less than $500,000. Effectively, this means an individual can make up to $150,000 of concessional contributions in a single financial year by utilising unapplied and unused concessional contribution caps from the previous five financial years.
|Income year||Maximum* CC cap with carry forward rule|
|2019–20||$25,000 to $50,000|
|2020–21||$25,000 to $75,000|
|2021–22||$25,000 to $100,000|
|2022–23||$25,000 to $125,000|
|from 2023–24||$25,000 to $150,000|
Prior to these amendments, if an individual did not fully utilise their annual CC cap in a financial year, they could not carry forward the unused cap to a later year. This rule constitutes an exception to the usual rule when it comes to concessional contributions: ‘Use it or lose it’.
What happens if I make excess contributions to super?
Author: Jesper Lim