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Contributions caps and taxation of contributions

What is a concessional contribution?

Section: 5.3

A concessional contribution is generally a super contribution to a complying super fund which is included in the super fund's assessable income. From 1 July 2017 some contributions which are not included in the fund's assessable income are included as concessional contributions for the first time (eg constitutionally protected funds and unfunded defined benefit schemes).

Contributions included in the concessional contributions cap

The following contributions count towards an individual's concessional contributions cap and will be taxed as excessive concessional contributions if they exceed the individual's concessional contributions cap.

Employer contributions (including SG and salary sacrifice contributions).
Personal contributions made by the member for which a valid deduction notice is submitted and acknowledged
Member contributions made on behalf of the member by another person, eg contribution by a friend (does not include spouse contributions, Government co-contributions, LISTO contribution or child contributions).
Amounts allocated from a fund's reserves to a member's account will be included in the member's concessional contributions cap except where:
  • They are allocated in a fair and reasonable manner to an account for every member of the fund or class of member in the fund, and
  • The amount that is allocated for the financial year is less than 5% of the value of the member's interest in the fund at the time of the allocation, or
  • The amount is allocated from a reserve for the purpose of enabling the fund to meet pension liabilities.
Payments by the Commissioner of Taxation to a super fund from the Superannuation Holding Accounts Special Account.
Payments by the Commissioner of Taxation to a super fund of SG shortfall amounts.
Any of the above contributions made to constitutionally protected funds from 1 July 2017.
Certain contributions to interests in defined benefit schemes from 1 July 2017.

Note: Payments from reserves in lieu of contributions (net of tax) must be grossed up by 1.176 (to include the tax liability) to calculate the amount counted towards the cap. An allocation does not have to be grossed up where the full nominal amount is allocated to a member's account and the trustee then deducts an allowance for tax.

Concessional contributions cap exclusions
The following contributions are specifically excluded from the definition of concessional contributions:

Contributions to non-complying super funds.
Transfers or rollovers of untaxed benefits from an untaxed scheme into a taxed fund.
Applicable fund earnings from an overseas pension transfer, received after six months of Australian tax residency, which the client elects to have taxed in the Australian super fund.
Contributions made and amounts allocated prior to 1 July 2017 to a superannuation interest in a constitutionally protected fund.
Downsizer contributions

Last modified: Tuesday, July 23, 2019