Concessional Contributions

Concessional contributions are typically Superannuation Guarantee contributions made to Superannuation by your employer on your behalf.  The word concessional (at a discount) relates to the tax status of contributions – taxed at a discount 15% rather than at marginal tax rates.

People with income that is not derived from salary and wages are also able to make concessional contributions. They must meet the 10% Rule. These contributions are classified as personal contributions.

An example of someone that can make personal concessional contributions is someone who owns a company and receives dividends or distributions rather than salaries and wages. This person can contribute part of this income to superannuation and deduct the expense from their personal tax.   Another example is someone who makes the majority of their annual income from capital gains and not salary and wages, they can still be employed and receive salary and wages as long this amount does not breach the threshold.

The word concessional (at a discount) relates to the tax status of contributions - taxed at a discount 15% rather than at marginal tax rates.

If you make concessional contributions to superannuation (or they are made on your behalf by your employer) your superannuation fund will become liable to pay contributions tax (15%) on those contributions.  Contributions tax can be reduced by carried forward tax losses or the application of franking credits or other tax credits. Expenses can also reduce contributions tax.

There is a cap on how much concessional contributions you can make in a year.

If you contribute more than this amount you will be liable for additional taxation on excess contributions.  Once money has been contributed to Superannuation the SMSF has 28 days in which to allocate the contribution to the member.

All concessional contributions will remain as taxable components of your members balance.  This means that when you die and your superannuation gets paid to a non-dependant this portion will be taxable for the recipient.  The recipient of this income will receive a tax rebate of 15% which reflects contributions tax already paid.

To be eligible to make concessional contributions there is a work test for those over the age of 65.