Concessional vs. Non-Concessional Contributions

The government wants you to do this, so they offer massive tax incentives. However, to stop wealthy people from using Super as a limitless tax haven, the Australian Taxation Office (ATO) strictly caps how much you can put in each year.

There are two distinct types of voluntary contributions, and they are treated entirely differently at tax time.

1. Concessional Contributions (Before-Tax)

Concessional contributions are made with money that has not yet been taxed at your normal income tax rate. Instead of paying your standard marginal tax rate (e.g., 30% or 37%), this money is taxed at a flat, "concessional" rate of just 15% when it enters your Super fund.

• How to do it: You can ask your employer to send a portion of your pre-tax salary directly to Super (Salary Sacrifice), or you can transfer your own savings into Super and claim it as a tax deduction on your tax return.
• The 2026/27 Cap: From 1 July 2026, the total limit is $32,500 per financial year.
• The Trap: This $32,500 cap includes the mandatory 12% your employer pays. If your employer pays $12,000 a year into your Super, you only have $20,500 left of your cap to use for voluntary concessional contributions.
• The "Carry-Forward" Loophole: If you have a total Super balance under $500,000, you can "carry forward" any unused concessional cap amounts from the previous 5 years. This is an incredibly powerful way to reduce your tax bill if you suddenly sell a property or get a massive bonus at work.

2. Non-Concessional Contributions (After-Tax)

Non-concessional contributions are made with your own money from your normal bank account—money that has already been taxed by your employer.

• How to do it: You simply log into your banking app and BPAY or transfer a lump sum directly to your Super fund without claiming a tax deduction.
• The Benefit: Because you already paid income tax on this money, the ATO takes 0% tax when it enters your Super fund. It then grows in a low-tax environment until you retire.
• The 2026/27 Cap: From 1 July 2026, the limit is $130,000 per financial year.
• The "Bring-Forward" Rule: If you come into a large sum of money (like an inheritance or selling a house), you can trigger the "bring-forward" rule. This allows you to combine three years' worth of caps and dump up to $390,000 into your Super in a single year, provided your total Super balance is below certain limits (less than $1.84 million for the full 3-year bring-forward).

Which One Should You Use?

If your goal is to pay less tax today while boosting your retirement, Concessional Contributions (Salary Sacrifice) are almost always the best first step.

You generally only use Non-Concessional Contributions when you have already maxed out your $32,500 concessional cap, or if you receive a sudden, massive windfall of cash that you want to protect from high taxes on future investment earnings.

Interactive: The Contribution Tax Optimizer

Want to put an extra $10,000 toward your future? Use the calculator below to see whether you end up with more money by investing it outside of Super, or by using a Concessional (Salary Sacrifice) contribution.

General Advice Warning: The information provided here is for general educational purposes only. It does not take into account your personal financial objectives, situation, or needs. Before making any financial decisions, please consider the appropriateness of the information and consult with a licensed financial adviser.