Super Contributions Tax Guide

Superannuation is one of the most tax-effective investment vehicles in Australia. Understanding the different types of contributions and their caps is essential for maximising your retirement savings while minimising tax.

Concessional Contributions (Before-Tax)

These include employer mandatory contributions (Super Guarantee), salary sacrifice arrangements, and personal contributions claimed as a tax deduction. They are taxed at just 15% inside the fund — significantly lower than most marginal tax rates.

• Annual cap: $30,000 (2025-26)
• Excess contributions tax: Excess amounts are taxed at your marginal rate plus an interest charge

Non-Concessional Contributions (After-Tax)

These are contributions made from your after-tax income. No further tax is payable on these amounts when they enter the fund, and earnings are taxed at 15%.

• Annual cap: $120,000 (2025-26)
• Bring-forward rule: If you're under 75, you can contribute up to $360,000 in a single year using the next two years' caps
• Total super balance: Must be under $1.9 million (2025-26) to use the bring-forward rule

Carry Forward (Unused Cap) Rules

From July 2018, if your total super balance is under $500,000, you can carry forward unused concessional cap amounts for up to 5 years. This is particularly useful for:

• Business owners making large catch-up contributions
• People returning to work after a career break
• Selling assets and wanting to boost super before retirement

Division 293 Tax (High-Income Surcharge)

If your income (including concessional contributions) exceeds $250,000, you pay an additional 15% Division 293 tax on your concessional contributions — bringing the total tax to 30%. This applies to the lower of:

• Your total concessional contributions, or
• The amount by which your income exceeds $250,000

Government Co-Contribution

If your total income is below $43,445, the government will match your non-concessional contributions at 50 cents per dollar, up to a maximum of $500. The co-contribution phases out completely at $58,445 income.

Salary Sacrifice Strategy

Salary sacrificing into super reduces your assessable income while boosting retirement savings. For someone earning $120,000 (37% marginal rate), each $1,000 sacrificed saves $370 in tax — the contribution is taxed at just 15% inside super, saving $220 overall.

Personal Deductible Contributions

If you're self-employed or want to claim a deduction for personal contributions, simply lodge a "Notice of Intent to Claim Deduction" form (NAT 71121) with your super fund before lodging your tax return. The fund must acknowledge receipt before you can claim the deduction.

Contribution Deadlines

Personal deductible contributions must be made by 30 June to count for that financial year. Contributions received by your super fund after 30 June are treated as being in the next financial year — allow 3-5 business days for electronic transfers.

How Contributions Are Taxed

Money going into super is taxed at three different points, and understanding the flow explains why super is such a powerful savings vehicle. Concessional (before-tax) contributions — employer super guarantee, salary sacrifice, and personal deductible contributions — are taxed at 15% inside your fund. Non-concessional (after-tax) contributions are not taxed on the way in because you have already paid tax on them. Investment earnings are taxed at 15% while your money is in accumulation phase, and once you move to pension phase after preservation age, earnings are tax-free and withdrawals at 60 and over are tax-free too.

The catch is the caps. For 2025-26 the concessional cap is $30,000 per year and the non-concessional cap is $120,000; from 1 July 2026 the concessional cap rises to $32,500 and the non-concessional cap to $130,000. Exceed the concessional cap and the excess is taxed at your marginal rate plus an interest charge — it is one of the most expensive mistakes in the system.

Contribution Strategy Checklist for 2026

1. Check your total super balance — if it was under $500,000 at 30 June, you can use unused concessional cap from the past five years (carry-forward), which is ideal after selling an asset or earning a bonus.
2. Salary sacrifice only if your marginal rate is above 15% — at the 16% bracket the saving is small; at 37% it is significant.
3. Time personal deductible contributions — your fund must receive them by 30 June, and you must lodge a Notice of Intent to Claim before you submit your tax return.
4. Watch Division 293 — if your income plus concessional contributions exceed $250,000, an extra 15% tax applies to your concessional contributions, effectively doubling their tax to 30%.
5. Low income earners: check the government co-contribution — earners below $47,488 (2025-26) can get up to $500 for a $1,000 after-tax contribution.