What Are Concessional Contributions in SMSFs

Concessional contributions refer to before-tax contributions made to a Self-Managed Super Fund (SMSF), which are taxed at a concessional rate of 15% inside the fund.

These include compulsory employer contributions such as the Super Guarantee (currently 12.0% as of July 2025), additional employer contributions, salary sacrifice arrangements where an employee directs part of their pre-tax salary into super, and personal contributions where the member claims a tax deduction.

The concessional contributions cap for 2025/26 is fixed at $30,000 per financial year for all individuals regardless of age. Contributions exceeding this cap may incur additional tax liabilities that must be declared on members’ personal tax returns, so careful management and tracking are essential.

Employer Contributions and Salary Sacrifice

Employer contributions include the mandatory Super Guarantee, which increased to 12.0% from 1 July 2025. Employers may also make voluntary contributions outside this guarantee.

Salary sacrifice arrangements let employees reduce their assessable income by directing part of their pre-tax salary into super, up to the concessional cap. These are a popular strategy for boosting retirement savings while reducing personal taxable income.

Personal Concessional Contributions

Individuals may make personal contributions to their SMSF and subsequently claim a deduction by lodging a valid Notice of Intent to Claim a Deduction with their fund. These personal concessional contributions count toward the annual $30,000 cap and are included in the fund’s concessional contributions taxed at 15%. This option adds flexibility for members wanting to increase before-tax super contributions within cap limits.

Carry-Forward Unused Concessional Contributions

From 1 July 2018, SMSF members with total super balances under $500,000 at the previous 30 June can carry forward unused portions of their concessional contribution cap for up to five years. This allows contributions exceeding the annual cap in later years without immediate excess contributions tax, provided the unused cap amount is available and total super balance criteria are met.

This carry-forward rule offers a valuable opportunity for members to boost super savings in specific years, especially with fluctuating income or after periods of lower contributions.

Compliance

SMSF trustees and members must accurately monitor all contributions to ensure limits are not exceeded and that contributions are made and recorded within the correct financial year to benefit from the cap. Contributions made after 30 June may count in the following year, affecting tax planning. Overcontributions attract additional taxes and require administrative reporting on personal tax returns.

Concessional contributions are a cornerstone of SMSF member retirement savings strategies. Understanding employer contributions, salary sacrifice, personal deductible contributions, and the carry-forward of unused caps enables effective, tax-aware super fund management.

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DISCLAIMER: This article is provided for general information only. While care has been taken, no guarantee is given as to the accuracy, completeness, or timeliness of the content. It does not constitute financial, accounting, legal, or SMSF advice and does not consider your personal circumstances. You should seek independent, licensed professional advice before making decisions about SMSFs, compliance, or investments. #SMSFConcessionalContributions #Superannuation2025 #TaxEffectiveSuper #SuperContributionCaps