Concessional contributions are before tax (pre-tax) superannuation contributions made by you or on your behalf. Concessional contributions include employer contributions, salary sacrifice contributions and any personal contributions for which you have claimed (or will claim) a tax deduction.
Concessional contributions also include other superannuation amounts paid by your employer, such as insurance premiums and fund administration fees, as well as some amounts transferred to you from superannuation fund reserves.
If you are a member of a defined benefit superannuation scheme, concessional contributions may also include defined benefit contributions.
Tax on concessional contributions
Your superannuation fund will ordinarily pay contributions tax on any concessional contributions that they receive. The fund’s tax rate on concessional contributions is usually 15%, but this may be reduced for any applicable tax deductions and offsets, e.g. eligible insurance premiums.
If you are a member of a defined benefit superannuation scheme, you may also have concessional contributions that are considered unfunded, e.g. contributions that your employer is liable for, but which have not actually been paid into your super fund. Your defined benefit superannuation fund is not taxed on unfunded contributions. However, unfunded superannuation amounts may be subject to taxation when benefits are paid to you or rolled over to another superannuation fund.
You may also be subjected to additional tax on your concessional contributions where:
- You exceed the limit on the amount of concessional contributions you are allowed in a given financial year (see also Concessional Contributions Cap).
- You exceed the relevant income threshold and become liable for Division 293 tax (see also Division 293 Tax).