By Philippa Billings, Chief Advice Officer, Otivo
Almost every explanation of this topic says the same thing: concessional contributions come from before-tax money and non-concessional contributions come from after-tax money. It is a tidy description and it is not quite right. You can transfer $5,000 from your everyday account to your super fund, and that single payment can end up being either type — it depends entirely on whether you claim a deduction for it and lodge the right form in time. The money did not change. The paperwork did. Here's what actually separates the two categories, and why that distinction decides the cap, the tax and the eligibility rules that follow.
Concessional contributions are those a deduction has been claimed for, or that are made from pre-tax pay. They are taxed at 15% in the fund and count towards a combined cap of $32,500 for 2026-27. Non-concessional contributions have no deduction claimed, are not taxed on entry, and count towards a separate cap of $130,000 for 2026-27.
What makes a contribution concessional?
A contribution is concessional if someone has claimed a tax deduction for it. That is the whole test — call it the deduction test.
Three things fall into the category:
- Superannuation guarantee. Your employer's compulsory contributions, currently 12% of qualifying earnings, and paid within seven business days of each payday since 1 July 2026. Your employer deducts them.
- Salary sacrifice. An arrangement where part of your before-tax pay is directed to super instead of to you. Again, your employer claims it.
- Personal deductible contributions. Contributions made in your own name for which you claim the deduction yourself.
All three are taxed at 15% on entry to the fund, which is the concession the name refers to. And critically, all three count towards one combined cap — not one each. For 2026-27 that combined cap is $32,500, up from $30,000 in 2025-26.
That combined nature is where people get caught. A 44-year-old on $150,000 already has around $18,000 of employer SG going in before she contributes a dollar herself. Her room for salary sacrifice and personal deductible contributions is what is left under $32,500, not a fresh $32,500. Members with unused cap space from earlier financial years may be able to exceed the general cap through the carry-forward rules, which our companion article covers in detail.
What makes a contribution non-concessional?
A contribution is non-concessional if no deduction has been claimed for it. It has already been taxed as income before it reaches the fund, so it is not taxed again on entry.
The category includes personal contributions made in your own name where you do not claim a deduction, contributions made by a spouse on your behalf, and government co-contributions.
The annual non-concessional cap for 2026-27 is $130,000, which is set at four times the concessional cap. There is also an eligibility gate that the concessional cap does not have: if your total super balance was $2.1 million or more on 30 June of the previous financial year, your non-concessional cap is nil for the current year. Members under 75 with lower balances may be able to bring forward future years' caps — again, covered in the companion article.
Why the notice of intent decides which type a contribution is
If you make a personal contribution and want it treated as concessional, the fund needs a valid notice of intent to claim a deduction, and the fund must acknowledge it before you can claim.
The deadline is not 30 June. It is the earlier of two dates: the day you lodge your tax return for the financial year the contribution was made in, or the end of the financial year after the one in which you made it. Both limbs apply, and the earlier one governs. Lodging your return early without having lodged the notice first is the most common way people lose the deduction, and it cannot be fixed afterwards.
Until that notice is lodged and acknowledged, the contribution is non-concessional. This is why the money's origin does not determine the category. The same payment sits in a different column depending on a form.
Otivo's tax-deductible personal contributions module works through eligibility and whether claiming a deduction makes sense given total concessional contributions, age, salary, retirement age, household income and monthly surplus.
What tax applies, and when does Division 293 change it?
Concessional contributions are taxed at 15% inside the fund. For most working Australians that is below their marginal rate, which is the point of the concession.
There is a threshold where it changes. If your income and concessional contributions together exceed $250,000 in a financial year, Division 293 applies an additional 15% to the affected contributions, taking the total to 30% rather than 15%. Income for this purpose includes taxable income, reportable fringe benefits, net investment losses and the concessional contributions themselves — so contributing more can itself push you over. The $250,000 threshold has not moved since 2017 and is not indexed.
Division 293 does not make concessional contributions unattractive. At 30%, they remain concessional for anyone on the top marginal rate, which with the Medicare levy sits materially higher.
Non-concessional contributions are not taxed on entry, because tax has already been paid on that income. Earnings on both types are taxed inside the fund at up to 15% during accumulation.
How do the two types compare?
- Deduction claimed: Concessional — Yes. Non-concessional — No.
- Tax on entry: Concessional — 15%, or 30% where Division 293 applies. Non-concessional — None.
- 2026-27 annual cap: Concessional — $32,500 combined across SG, salary sacrifice and personal deductible contributions. Non-concessional — $130,000.
- Balance-based eligibility: Concessional — No. Non-concessional — Yes — nil cap if total super balance was $2.1 million or more on 30 June of the prior year.
- Catch-up mechanism: Concessional — Carry-forward of unused cap from up to five prior years, if eligible. Non-concessional — Bring-forward of up to two future years' caps, if eligible.
What if you go over the concessional cap?
Excess concessional contributions are not penalised at a flat rate, contrary to a common belief.
The excess is included in your assessable income and taxed at your marginal rate, with a 15% tax offset for the tax the fund has already paid. An excess concessional contributions charge also applies. You can elect to release up to 85% of the excess from your super fund to help meet the resulting tax.
The 47% figure people sometimes quote relates to excess non-concessional contributions, not concessional ones, and applies where excess non-concessional amounts are not released.
Who can make these contributions?
Age matters, and the rules differ by contribution type.
- Under 67. Personal deductible contributions can be made without meeting a work test.
- Age 67 to 74. To claim a deduction for a personal contribution, you must meet the work test — 40 hours of gainful employment in 30 consecutive days — or a work test exemption, in the year the contribution is made. The work test does not apply to non-deductible contribution types.
- Age 75 and over. Voluntary contributions generally cannot be made, with limited exceptions including mandated employer contributions and downsizer contributions. Funds can accept contributions up to 28 days after the end of the month in which a member turns 75.
The work test was not abolished outright. It was removed for non-deductible contributions from 1 July 2022 but still applies to personal deductible contributions for those aged 67 to 74.
What about the government co-contribution?
If your total income for 2026-27 is $49,293 or less, you make a personal non-concessional contribution of $1,000 and you meet the other conditions, the government may add up to $500. The entitlement reduces by 3.333 cents for every dollar above the lower threshold and cuts out at $64,293.
The other conditions include being under 71 at the end of the financial year, lodging a tax return, having at least 10% of total income from employment or business, and holding a total super balance below $2.1 million on the prior 30 June. There is no application — the ATO pays it automatically once the return is processed.
Note that a contribution you claim a deduction for does not qualify. Co-contributions attach to non-concessional contributions only.
Frequently asked questions
Can the same contribution be both concessional and non-concessional?
It can be split. If you contribute an amount and claim a deduction for only part of it, the part covered by a valid, acknowledged notice of intent is concessional and the remainder is non-concessional, counting towards the respective caps.
Do employer contributions count towards the concessional cap?
Yes. Superannuation guarantee contributions count towards the same $32,500 cap as salary sacrifice and personal deductible contributions for 2026-27. They are not a separate allowance, and for higher earners they can consume most of the cap on their own.
How do you check how much cap space you have left?
Year-to-date concessional contributions reported by funds are visible in ATO online services through myGov, under Super. Contributions count when the fund receives them, not when you send them, which matters near the end of a financial year.
Is salary sacrifice better than a personal deductible contribution?
Neither is universally better — they land in the same cap and attract the same 15% tax. Salary sacrifice happens automatically through payroll and reduces tax at each pay. A personal deductible contribution is made in your own name, gives more flexibility over timing, and requires the notice of intent. Which suits depends on cash flow, employer arrangements and how settled your income is for the year.
The deduction test is the whole distinction, and everything else follows from it — the cap, the tax, the eligibility gate and the paperwork deadline. Otivo is a licensed digital advice provider holding AFSL and Australian Credit Licence No. 485665. Customers who follow our contributions advice in full could be better off by an average of $180,356 in today's dollars by retirement, and our tax-deductible personal contributions module is where that starts.
Sources
- ATO, contributions caps, 2026-27.
- ATO, non-concessional contributions cap.
- ATO, government contributions.
- ATO, Division 293 tax.
- ATO, notice of intent to claim or vary a deduction for personal super contributions.
Disclaimer
The information in this communication is current as at August 2026 and has been prepared by Otivo Pty Ltd ABN 47 602 457 732, AFSL and Australian Credit Licence No. 485665. This content is general information only and has been prepared without taking into account your objectives, financial situation or needs. It is not personal financial or taxation advice and should not be relied on as such. Before acting on any information, you should consider its appropriateness having regard to your personal circumstances. This material must not be reproduced in whole or in part, or posted on any social media platform, without the prior written consent of Otivo Pty Ltd.