Concessional Contribution

Concessional contributions are superannuation contributions made from pre-tax income, including employer superannuation guarantee (SG) contributions, salary sacrifice contributions, and personal deductible contributions. These contributions are 'concessional' because they're taxed at 15% in the super fund rather than at your marginal tax rate (potentially up to 47%). For the 2023-24 financial year, the concessional contributions cap is $27,500 annually. This includes all employer SG, salary sacrifice, and any personal contributions you claim as a tax deduction. If you exceed this cap, excess contributions are taxed at your marginal rate plus an excess concessional contributions charge, effectively eliminating the concessional treatment. When insurance premiums are paid from superannuation, they're funded from concessional contributions that have been taxed at 15%. This makes super insurance premiums effectively pre-tax, providing a tax advantage over retail insurance paid with after-tax dollars. However, the premiums still reduce your super balance and future retirement savings. For high-income earners (income over $250,000), an additional 15% Division 293 tax applies to concessional contributions, bringing the effective tax rate to 30%. The carry-forward rule allows you to make additional concessional contributions if your total super balance is less than $500,000 and you haven't used your full cap in previous years (up to 5 years).