A personal concessional contribution is a contribution you make to superannuation and claim as a tax deduction against your personal income.
Advantages of making a personal concessional contribution:
- The contribution is typically taxed at 15%, instead of being taxed at your marginal tax rate.
- Earnings that accrue on these funds are taxed at a maximum of 15% inside the fund.
Limitations of making a personal concessional contribution:
- You will not be able to access the funds until you have met a condition of release.
- Your annual concessional contribution limit is $27,500. This includes any employer’s Superannuation Guarantee payments. If you exceed the limit, the excess is effectively taxed at your marginal tax rate plus an additional tax penalty. If you don’t withdraw the excess amount then these are counted towards your non-concessional contribution limit.
- If your ‘income for surcharge purposes’ plus your ‘low tax contributions’ exceed $250,000 in a financial year, then additional tax, known as Division 293 tax, may be imposed at the rate of 15%.