Author: JM_84(Champion)Champion 10 June 2024
Concessional contributions includes employer contributions and personal contributions you claim as a personal tax deduction. These amounts are assessable income of the super fund and taxed at its tax rate of 15%. These amounts form the taxable component.
However, non-concessional contributions are made from your after-tax income or savings. These amounts do not get taxed in the super fund. Any earnings on this is taxed at 15% (NOTE: earnings form part of the taxable component). Non-concessional contributions form part of the tax-free component.
In the future, if you took a super lump sum - the tax-free portion would be returned to you tax free (ie a return of your own capital). The taxable portion may have tax implications depending on your age at the time it is paid.
If you are making additional contributions via your employer, such as salary sacrifice, these amounts are concessional contributions. However, if you make a personal contribution from after tax income, you may be eligible to claim a tax deduction. These contributions will be taxed at 15% inside the super fund but you will receive a tax deduction (the value depends on your marginal tax rate). For example, if $1,000 is put in as a personal contribution, the super fund taxes this at 15% ($150). A personal deduction is claim and let's assume a marginal tax rate of 34.5% (including Medicare levy) meaning a personal tax saving of $345.
Here is page on the ATO which outlines the steps if you are considering making a personal contribution and claiming as a tax deduction to ensure the appropriate steps are taken:
Personal super contributions | Australian Taxation Office (ato.gov.au)
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