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Investor Education > Superannuation > Types of superannuation contributions

SUPER CONTRIBUTIONS

 

The tax treatment for super contributions depends on what type of superannuation contribution they are and they fall into two broad categories:

  • Concessional contributions can be claimed as a personal tax deduction which is taxed at 15% instead of your marginal rate subject to not exceeding an annual contribution cap. 
  • Non-concessional contributions are generally contributions that are not tax deductible. These contributions are not taxed when they are made. Non-concessional contributions are also subject to annual contribution caps.

Investors should note that caps and restrictions apply to the amount of concessional and non-concessional contributions that can be made.  Penalty tax may apply if these caps are exceeded.

Types of Contributions

Within these two categories there are different types of contributions which are paid into superannuation:

Employer contributions
The requirement of the Superannuation Guarantee (administration) Act 1992 states that employers provide employees with a minimum level of superannuation. Generally your employer must pay 9.25% of your earnings into a super account on your behalf. This law applies to all working Australians aged between 18 and 70, except those earning less then $450 per month. Employer contributions are concessional contributions.

Personal contributions (non concessional contributions)
Formerly known as undeducted contributions, non-concessional contributions are after tax contributions made to your own super account for which it is not possible to claim an income tax deduction.

Salary sacrifice
An arrangement between you and your employer where you agree to reduce your pre-tax salary by a nominated amount to be contributed to your super fund instead. These concessional contributions are paid in pre taxed dollars which will often save you tax as contributions are taxed at 15% instead of your marginal tax rate. Please note that the concessional contribution cap includes both employer and salary sacrifice contributions.

Spouse contributions
This can also come under non concessional contributions and are made on behalf of an eligible spouse.

Superannuation co-contributions
If you make personal contributions and you earn within a maximum amount of income, the government may make a co-contribution to your superannuation account.

Contributions caps

The concessional contribution allowable includes employer contributions under the Superannuation Guarantee and any salary sacrifice arrangements. The concessional cap applies to all your funds if you hold multiple super funds. Under normal circumstances, the concessional contributions cap is indexed in line with average weekly ordinary time earnings however this was paused until up to and including the 2013/14 financial year. As at January 2014, normal indexation resumes for the 2014/15 financial year.

CONCESSIONAL CONTRIBUTION CAP

  2013/2014 2014/2015
General cap per annum $25,000 $30,000
Aged 59 or over on 30 June 2013 $35,000* -
Aged 49 or over on 30 June 2014 - $35,000*

*The temporary higher cap is not indexed and will cease when the general concessional contributions cap is indexed to $35,000.

 

NON-CONCESSIONAL CONTRIBUTION CAP

  2013/2014 2014/2015
General cap per annum $150,000 $180,000
Bring forward amount (3 years) $450,000 $540,000

The non-concessional contribution cap per financial year applies to personal contributions for which you do not claim an income tax deduction. For people under 65 years of age, they can take advantage of the ‘bring-forward’ option and make non-concessional contributions of up to three times the cap) over a three year period.



Contributing to Super

Depending on your age and circumstance, there may be limits to your eligibility to contribute to super.

ELIGIBILITY TO CONTRIBUTE

  Concessional Contributions Non-Concessional Contributions
  Superannuation Guarantee Salary sacrifice Self employed Personal Spouse
Aged below 65 X X X X X
Aged 65-69 and worked for at least 40 hours in a period of no more than 30 consecutive days in that financial year X X X X X
Aged 70-74 and have worked at least 40 hours in a period of no more than 30 consecutive days in that financial year. X
 
X X X  
Aged 75 or over X        


 

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