When adding money to your superannuation, it matters whether contributions come from before-tax or after-tax income. Each type is taxed differently, subject to different caps, and suits different strategies.
Before-Tax Contributions (Concessional)
Concessional contributions are made from pre-tax income. They include:
- Employer Super Guarantee (SG) contributions (11.5% in FY2024–25)
- Salary sacrifice arrangements
- Personal contributions where you claim a tax deduction
Tax treatment:
- Concessional contributions are taxed at 15% when they enter your fund (the “contributions tax”)
- If your income plus concessional contributions exceeds $250,000, an additional 15% applies (Division 293 tax — total 30%)
- This is advantageous for most people, whose marginal rate is 32.5–47%
Cap (FY2024–25): $30,000 per year (including all employer and personal concessional contributions)
Unused cap carry-forward: If your total super balance (TSB) is below $500,000 on 30 June of the prior year, you can carry forward unused concessional cap from the prior five years.
After-Tax Contributions (Non-Concessional)
Non-concessional contributions (NCCs) are made from income on which you have already paid personal income tax. They include:
- Personal contributions where you do not claim a tax deduction
- Spouse contributions
Tax treatment:
- NCCs are not taxed when entering your fund (contributions tax does not apply)
- They are not deductible — you’ve already paid tax on the money
Cap (FY2024–25): $120,000 per year. If your TSB is $1.9M or above, NCCs are not permitted.
Bring-forward rule: If you are under 75, you can bring forward up to two future years of NCC cap — allowing up to $360,000 in a single year (subject to TSB limits).
Side-by-Side Comparison
| Feature | Before-Tax (Concessional) | After-Tax (Non-Concessional) |
|---|---|---|
| Source | Pre-tax income | Post-tax income |
| Tax on entry to fund | 15% (or 30% for high earners) | Nil |
| Tax deductible | Yes (salary sacrifice or notice of intent) | No |
| Annual cap | $30,000 | $120,000 |
| Bring-forward | Carry-forward unused cap (if TSB <$500k) | Up to $360,000 in one year (bring-forward rule) |
| Inside fund tax rate on earnings | 15% accumulation, 0% pension phase | 15% accumulation, 0% pension phase |
| Eligible for LISTO | Yes (for low-income earners) | No |
| Co-contribution eligible | No | Yes (for low-to-middle income earners) |
Which Should You Use?
Before-tax contributions are generally more effective for:
- Higher income earners (32.5% marginal rate or above) who save tax on the contribution
- Salary sacrifice — contributions reduce assessable income
- Maximising the concessional cap ($30,000) each year
After-tax contributions are generally better for:
- People who have already maximised concessional contributions
- Those receiving an inheritance or windfall who want to move money into super’s low-tax environment
- Near-retirement members making large one-off contributions using the bring-forward rule
- Lower income earners eligible for the government co-contribution (which requires NCCs)
Frequently Asked Questions
Can I make both types of contributions in the same year? Yes — many Australians use both. Employer SG contributions are concessional, while additional voluntary contributions can be non-concessional if you don’t claim a deduction.
How do I make a personal contribution concessional? Lodge a Notice of Intent to Claim a Deduction with your fund before you lodge your tax return. This converts the contribution from non-concessional to concessional for tax purposes.
What if I exceed my caps? Excess concessional contributions are included in your assessable income and taxed at your marginal rate (with a 15% offset for contributions tax already paid). Excess NCCs incur an excess NCCs tax charge — generally 47%.
For more: Concessional Contribution Cap, Non-Concessional Contributions Guide, Salary Sacrifice Super, LISTO Explained. For advice tailored to your situation, speak with a licensed financial adviser via MoneySmart.