The basics
Australia's superannuation system requires your employer to contribute a percentage of your salary into super on your behalf (currently 12% from FY2025-26 — the legislated final rate). But you can also choose to contribute more on top of that, either voluntarily from your own pocket or through salary sacrifice.
Extra contributions can help build your super balance faster and take advantage of the tax-effective environment inside a super fund. The rules, tax treatment, and limits differ depending on which type of contribution you make.
The two types: concessional vs non-concessional
Concessional contributions (before-tax)
Concessional contributions are made from pre-tax income and taxed at 15% inside the fund. They include:
- Your employer's compulsory SGC contributions
- Salary sacrifice contributions you arrange with your employer
- Personal contributions you claim as a tax deduction (by lodging a notice of intent to claim)
The annual concessional cap is $30,000 for FY2025-26. All concessional contributions from all sources count together toward this limit.
Non-concessional contributions (after-tax)
Non-concessional contributions come from your after-tax income and are not taxed again when they enter super. They are limited to $120,000 per year, or up to $360,000 over three years using the bring-forward rule (for those under age 75 who qualify). Your total super balance must be below $1.9 million to make non-concessional contributions.
Claiming a deduction on personal contributions
If you contribute money directly to your super fund from your bank account, those contributions are initially treated as non-concessional. However, if you are eligible, you can lodge a notice of intent to claim a deduction with your fund. Once accepted, those contributions convert to concessional and reduce your taxable income for that financial year.
This approach gives self-employed people and those whose employers do not offer salary sacrifice an alternative way to access concessional tax treatment. The notice must be lodged before you lodge your tax return or roll over/withdraw from the fund.
Catch-up contributions
If you have not used your full concessional cap in previous years and your total super balance is below $500,000, you may be able to carry forward unused cap amounts from the past five financial years. This allows you to make a larger concessional contribution in a single year, which can be useful after a career break, reduced income period, or unexpected lump-sum income.
Special considerations
Low Income Superannuation Tax Offset (LISTO)
If your income is $37,000 or less, the government may contribute up to $500 directly into your super account to effectively refund the contributions tax paid on your concessional contributions. This makes salary sacrifice and personal concessional contributions effectively tax-free for low-income earners.
Division 293 tax
If your income plus concessional contributions exceeds $250,000, an additional 15% tax applies to the concessional contributions (or the portion that pushes you over the threshold). The ATO assesses this separately after your tax return is lodged.
Spouse contributions
You can contribute to a low-income spouse's super account and may be eligible for an 18% tax offset on up to $3,000 of contributions if your spouse's income is below $37,000.
Potential benefits
- Tax savings on concessional contributions if your marginal rate exceeds 15%
- Investment earnings inside super taxed at only 15% (accumulation phase), or 0% in retirement phase
- Compounding over a long time horizon can significantly increase a retirement balance
- Catch-up rules allow flexible timing for those with variable income
Potential risks and tradeoffs
- Inaccessibility. Super is locked away until preservation age and an appropriate condition of release. It is not suitable as an emergency fund or short-term savings.
- Rule changes. Super rules can change with legislation. Contribution caps, tax rates, and access conditions have all changed in the past and may change again.
- Investment risk. Super funds invest in assets that can fall in value. Past fund performance does not guarantee future results.
- Opportunity cost. Money contributed to super is not available for other goals like a house deposit or paying down debt. The right choice depends on personal circumstances.
Frequently asked questions
Can I make a voluntary contribution without my employer knowing?
Yes. You can transfer money directly from your bank account to your super fund at any time. Your employer does not need to be involved for personal (non-salary-sacrifice) contributions.
What happens if I exceed the concessional cap?
Excess concessional contributions are included in your assessable income and taxed at your marginal rate. You receive a 15% offset to account for contributions tax already paid. The ATO sends an excess concessional contributions determination with your tax assessment.
What happens if I exceed the non-concessional cap?
Excess non-concessional contributions can be withdrawn (with associated earnings) or left in super and taxed at 47%. The ATO will issue a notice and you generally have 60 days to decide. Staying within the cap is strongly preferable.
How does my super fund know the type of contribution?
Employer contributions come through SuperStream with classification codes. Personal contributions are treated as non-concessional unless you submit a valid notice of intent to claim a deduction with your fund before lodging your tax return.
Model how extra super contributions affect your projected balance with the Superannuation Calculator or see the tax impact of salary sacrifice with the Salary Sacrifice Calculator.