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Concessional Contributions Explained
The tax-saving powerhouse of superannuation
Concessional contributions are one of the most powerful tax-saving tools available to Australians. By contributing from before-tax income, you generally pay 15% contributions tax inside super instead of your marginal tax rate — potentially saving thousands of dollars each year while building retirement savings.
This guide covers what counts as a concessional contribution, how the cap works (including carry-forward), how to set up salary sacrifice, how to claim a deduction for personal contributions, and what happens if you go over the limit.
What Are Concessional Contributions?
Concessional contributions (CC) are contributions made from before-tax money. They are “concessional” because they receive a tax concession: instead of being taxed at your marginal tax rate, they are generally taxed at 15% when they enter your super fund.
What Counts as a Concessional Contribution?
Employer Super Guarantee (SG)
The compulsory 12% your employer contributes on your ordinary time earnings. This is automatically counted as a concessional contribution.
Salary sacrifice
Additional amounts you arrange with your employer to redirect from your pre-tax salary into super.
Personal deductible contributions
Contributions you make from your bank account that you later claim as a tax deduction, after lodging a valid Notice of Intent (NAT 71121) with your fund and receiving their acknowledgement.
Employer voluntary contributions
Extra employer amounts above SG (for example, as part of an employment benefit or enterprise agreement).
Important: Your concessional cap includes all concessional contributions combined (SG + salary sacrifice + deductible contributions). The cap is not “per employer” or “per fund”.
The Tax Advantage: How Much Can You Save?
The tax benefit depends on your marginal tax rate (including Medicare levy). The higher your marginal tax rate, the larger the potential saving from contributing before tax.
| Taxable income (resident) | Marginal rate (incl. Medicare) | Tax saved per $1,000 CC (marginal − 15%) |
|---|---|---|
| $18,201 – $45,000 | 18% (16% + 2%) | $30 |
| $45,001 – $135,000 | 32% (30% + 2%) | $170 |
| $135,001 – $190,000 | 39% (37% + 2%) | $240 |
| $190,001+ | 47% (45% + 2%) | $320 |
Worked example: Alex earns $120,000
Alex salary sacrifices $15,000 into super. Here’s the tax comparison (ignoring any Division 293 exposure):
- Without salary sacrifice: $15,000 × 32% = $4,800 tax
- With salary sacrifice: $15,000 × 15% = $2,250 contributions tax in super
- Estimated tax saved: $4,800 − $2,250 = $2,550
That’s $2,550 more working for Alex’s retirement instead of being lost to tax.
Salary Sacrifice: How to Set It Up
Salary sacrifice is the most common way employees make additional concessional contributions. It is an agreement with your employer to redirect part of your future salary into super.
- Ask payroll/HR for the process – many employers have a standard form or portal.
- Choose the amount – typically a dollar amount per pay or a percentage.
- Confirm the start date – sacrifice must be set up prospectively (you generally can’t sacrifice income already earned).
- Track contributions during the year – especially if you change jobs or have multiple employers.
Watch-outs:
- Include your employer SG when calculating your total concessional contributions for the year.
- If you are paid irregular bonuses or commissions, allow “buffer” space under the cap.
- Some salary packages are “total remuneration including super”, which can affect take-home pay when SG increases.
Personal Deductible Contributions: Claim a Tax Deduction
If you are self-employed, a contractor, or want flexibility beyond salary sacrifice, you can make personal contributions and claim a tax deduction. This converts after-tax money into concessional contributions.
How to claim a deduction (practical steps)
- Make the contribution – transfer money to your super fund using their contribution method and reference.
- Send a Notice of Intent (NAT 71121) – tell your fund the amount you intend to claim.
- Receive the fund’s acknowledgement – you generally cannot claim without it.
- Claim in your tax return – include the deductible amount in your return for that financial year.
Timing matters: You generally must lodge your Notice of Intent and receive acknowledgement before you lodge your tax return, and before you start an income stream, roll over, or withdraw from the account holding the contribution.
Who can claim?
- Most people can claim a deduction for personal super contributions (subject to eligibility and age/work rules).
- The amount claimed must be within your concessional cap (or available carry-forward cap).
- You must give a valid Notice of Intent to your fund and receive their acknowledgement.
The Concessional Contributions Cap
Your total concessional contributions for 2026-27 are capped at $32,500.
Carry-forward (catch-up) concessional contributions: If your Total Super Balance was under $500,000 at 30 June of the previous financial year, you may be able to use unused concessional cap amounts from the previous five years.
Example: Using carry-forward caps
Emma’s Total Super Balance is $450,000. Assume she used only $20,000 of her concessional cap in each of the last 3 financial years.
- Current year cap: $30,000
- Unused from 2024–25 (cap $30,000): $10,000
- Unused from 2023–24 (cap $27,500): $7,500
- Unused from 2022–23 (cap $27,500): $7,500
- Total available this year: $30,000 + $10,000 + $7,500 + $7,500 = $55,000
Carry-forward availability depends on your Total Super Balance at 30 June and your actual unused amounts recorded by the ATO.
Division 293 Tax: High Earners
If your income plus concessional contributions exceeds $250,000, you may pay an additional 15% tax on some or all of your concessional contributions. This can lift the effective contributions tax rate to 30% on affected amounts.
Planning note: Even at 30% contributions tax, super can still be tax-effective versus 37% or 45% marginal rates — but you should model the trade-offs (cashflow, caps, and timing).
What Happens If You Exceed the Cap?
If you exceed your concessional cap, the ATO may issue an Excess Concessional Contributions determination. Common outcomes include:
- The excess amount is added to your assessable income and taxed at your marginal rate.
- You receive a 15% tax offset (reflecting contributions tax already paid in the fund).
- You can usually elect to release up to of the excess from super to help pay the additional tax.
- If you do not release the excess, it can also count towards your non-concessional cap, which may create further issues.
Practical tip: The most common “accidental” breaches occur with multiple employers, employment changes late in the year, or making a deductible contribution without allowing room for SG.
Key Deadlines
For personal deductible contributions, you also need to lodge your Notice of Intent and receive acknowledgement before lodging your tax return (and before certain account changes such as starting a pension or rolling over).
Where to Next?
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