Concessional contributions are before-tax (pre-tax) contributions to superannuation that are taxed at 15% inside the fund — well below most Australians’ marginal income tax rate. They are one of the most tax-effective strategies available to Australian investors for building retirement wealth.
What Are Concessional Contributions?
Concessional contributions include:
- Employer Super Guarantee (SG) contributions — 11.5% of ordinary time earnings (FY2024–25), rising to 12% in FY2025–26. Mandatory, automatically paid by employers.
- Salary sacrifice contributions — additional before-tax contributions arranged through your employer
- Personal deductible contributions — contributions made from your after-tax bank account that you claim as a tax deduction in your annual tax return
All three types count toward the $30,000 annual concessional cap (FY2025–26).
How Personal Deductible Contributions Work
Self-employed individuals, employees, and most Australians under 75 can make personal contributions to super from their bank account and claim them as a tax deduction:
- Contribute to your super fund from your personal bank account
- Lodge a Notice of Intent to Claim a Deduction (ATO form s290-180) with your super fund before you lodge your tax return or before the fund splits/rolls over the contribution
- Claim the contribution as a deduction in your income tax return
- The fund pays 15% contributions tax on the contributed amount
Example: You earn $95,000 and contribute $10,000 to super as a personal deductible contribution.
- Tax saving: $10,000 × (34.5% marginal rate – 15% super tax) = $1,950 tax saving
- Net cost of $10,000 contribution after tax = $8,050
Tax Benefits of Concessional Contributions
The tax benefit of concessional contributions depends on your marginal tax rate:
| Marginal rate (inc. Medicare) | 15% super rate | Net tax saving per $1 contributed |
|---|---|---|
| 21% (up to ~$45,000 income) | 15% | 6 cents |
| 34.5% (~$45,000–$135,000) | 15% | 19.5 cents |
| 39% (~$135,000–$190,000) | 15% | 24 cents |
| 47% (>$190,000) | 30% (Div 293) | 17 cents |
Those in the 34.5% and 39% brackets gain the most from concessional contributions. Very high earners (Div 293) still benefit but to a lesser degree.
Low Income Super Tax Offset (LISTO)
Australians earning less than $37,000 who make concessional contributions receive a government refund of up to $500 into their super — the Low Income Super Tax Offset (LISTO). This prevents low-income earners from being worse off in super than if they’d paid income tax directly.
The $30,000 Annual Cap
The concessional cap for FY2025–26 is $30,000. This covers all concessional contributions — employer SG + salary sacrifice + personal deductible.
Example — employee earning $100,000:
- Employer SG at 11.5% = $11,500
- Remaining concessional cap = $30,000 – $11,500 = $18,500 available for salary sacrifice or personal deductible contributions
Catch-Up Contributions
If you have unused concessional cap amounts from the prior 5 years and your Total Super Balance is below $500,000, you can make catch-up concessional contributions above the annual cap. See Catch-Up Concessional Contributions.
Related Articles
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- Salary Sacrifice Super Australia
- Non-Concessional Contributions Australia
- Catch-Up Concessional Contributions Australia
- Retirement Investing hub
Frequently Asked Questions
Can I make concessional contributions if I am self-employed? Yes. Self-employed people cannot salary sacrifice (they are not employees), but they can make personal contributions to super and claim them as a tax deduction. This is one of the primary super strategies for self-employed Australians.
Do I need to lodge a Notice of Intent form every year? Yes. A valid notice of intent must be lodged with your super fund for each financial year you wish to claim a deduction on personal contributions. Failure to lodge the notice before the deadline means you cannot claim the deduction.
Are concessional contributions taxed when I withdraw super in retirement? In most cases, no. If you are over your preservation age and access super in the retirement phase, the tax-free component and taxable (concessional) component of your super have specific tax treatment — generally nil tax after age 60 for the untaxed element. See Super Withdrawal Tax Australia.
This article provides general financial information only. For advice tailored to your situation, speak with a licensed financial adviser through the ASIC financial advisers register or MoneySmart.