Voluntary contributions to your Australian super are taxed at two different rates depending on the source of the money. Before-tax (concessional) contributions attract a flat 15% tax inside the fund. After-tax (non-concessional) contributions enter the fund with no additional tax because you have already paid income tax on that money. The 15% rate is what makes salary sacrifice and deductible personal contributions worthwhile: it usually sits well below your marginal income tax rate. Around those two headline rates sit caps, offsets, and penalties that can shift the outcome significantly if you miscount.
Before-Tax Contributions Taxed at 15%
Concessional contributions are amounts that go into super from pre-tax income. The two common routes are salary sacrifice, where your employer diverts part of your pay before withholding income tax, and personal contributions where you later claim a tax deduction. Either way, the fund deducts 15% before crediting the balance of the contribution to your account.1Australian Taxation Office. Personal Super Contributions
Compare that 15% to marginal income tax rates of 30%, 37%, or 45%, and the saving is the difference.2Australian Taxation Office. Tax Rates – Australian Resident Your employer’s compulsory Super Guarantee payments are also concessional contributions and share the same annual cap as your voluntary top-ups, so both need to be counted together.
Low Income Super Tax Offset
If your adjusted taxable income is $37,000 or less, the 15% contributions tax is effectively refunded through the Low Income Super Tax Offset. The ATO calculates 15% of your concessional contributions and pays that amount into your fund, capped at $500 a year, with no application required.3Australian Taxation Office. Low Income Super Tax Offset From 1 July 2027, the threshold rises to $45,000 and the cap to $810; the current settings still apply for 2025–26 and 2026–27.4Australian Taxation Office. Low Income Superannuation Tax Offset (LISTO)
Division 293 for High Income Earners
At the other end of the scale, Division 293 applies an extra 15% on concessional contributions when your income plus concessional contributions exceeds $250,000. The additional tax hits the lesser of your concessional contributions or the amount by which you cross the threshold, bringing total contributions tax to 30%.5Australian Taxation Office. Division 293 Tax on Concessional Contributions by High-Income Earners The ATO issues a Division 293 notice after your return is processed. You can pay it yourself or elect to have the amount released from super.
After-Tax Contributions Enter Tax-Free
Non-concessional contributions come from money you have already paid income tax on, so no further tax applies when they enter the fund.6Australian Taxation Office. Understanding Concessional and Non-Concessional Contributions The benefit here is not a deduction on the way in but the lower tax rate on investment earnings once the money is inside super.
Whether a personal contribution is concessional or non-concessional depends on one thing: whether you claim a deduction for it. Claim the deduction and it becomes concessional and attracts the 15% tax. Skip the deduction and it stays non-concessional and enters tax-free.1Australian Taxation Office. Personal Super Contributions
Tax on Earnings Inside the Fund
Once your money is in super, investment returns during the accumulation phase are taxed at 15%. Capital gains on assets the fund has held for at least 12 months get a one-third discount, taking the effective rate on those gains to 10%.7Parliamentary Budget Office. Budget Explainer – How Is Super Taxed That is why even after-tax contributions, which get no break on the way in, still benefit from the super environment.
Annual Contribution Caps
Concessional Cap
For 2025–26, the concessional cap is $30,000. It rises to $32,500 from 1 July 2026 through indexation.8Australian Taxation Office. Contributions Caps The single cap covers all concessional amounts across every fund and employer: Super Guarantee, salary sacrifice, and deductible personal contributions combined.9Australian Taxation Office. Concessional Contributions Cap
If you did not use your full cap in a previous year, you may be able to carry the unused amount forward. Two conditions: your total super balance across all funds must be below $500,000 at the previous 30 June, and only unused amounts from the last five financial years (starting from 2018–19) are available. Anything older expires.9Australian Taxation Office. Concessional Contributions Cap
Non-Concessional Cap
The non-concessional cap is $120,000 for 2025–26 and $130,000 from 1 July 2026.10Australian Taxation Office. Non-Concessional Contributions Cap If your total super balance is $2 million or more at the previous 30 June ($2.1 million from 2026–27), your non-concessional cap drops to zero and you cannot make these contributions at all.
Under 75, you can bring forward up to two additional years of caps in a single contribution. From 1 July 2026, the maximum three-year bring-forward is $390,000. How much you can actually access depends on your total super balance; the closer you sit to the $2.1 million threshold, the fewer future-year caps you can pull forward.10Australian Taxation Office. Non-Concessional Contributions Cap
What Happens If You Exceed a Cap
Excess Concessional Contributions
Concessional amounts over the cap are added to your assessable income and taxed at your marginal rate. Because the fund already withheld 15%, you receive a 15% offset so the same dollars are not taxed twice.8Australian Taxation Office. Contributions Caps The excess also counts towards your non-concessional cap unless you elect to release it, which can push you into a second breach if you were already near that limit.
Excess Non-Concessional Contributions
Going over the non-concessional cap is harsher. The ATO sends a determination giving you 60 days to choose one of two paths.10Australian Taxation Office. Non-Concessional Contributions Cap You can release the excess plus 85% of the associated earnings from the fund, in which case those earnings are added to your assessable income with a 15% offset. Or you can leave the excess in super, and it is taxed at the top marginal rate plus the Medicare levy, currently 47%. Do nothing and the ATO defaults to releasing the excess.
Claiming a Deduction on a Personal Contribution
A personal contribution is not automatically concessional. To claim the deduction and get the 15% rate rather than non-concessional treatment, you must lodge a notice of intent with your fund using the ATO’s NAT 71121 form.11Australian Taxation Office. Notice of Intent to Claim or Vary a Deduction for Personal Super Contributions
The notice must reach your fund before whichever comes first: the day you lodge your income tax return for the year, or 30 June of the following financial year.12Australian Taxation Office. Notice of Intent to Claim a Deduction Miss both deadlines and the contribution stays non-concessional; no deduction, and no 15% treatment. The fund must send you a written acknowledgment; that acknowledgment is what substantiates your deduction if the ATO queries the claim.
Government Co-Contribution
If you earn below the threshold and make an after-tax personal contribution, the government matches 50 cents per dollar, up to $500 a year. For 2025–26, the full co-contribution applies below $47,488 and tapers to zero at $62,488. From 2026–27 the thresholds rise to $49,293 and $64,293.13Australian Taxation Office. Government Contributions To get the full $500 you need to contribute at least $1,000 in non-concessional personal contributions during the year. Payment happens automatically after you lodge your return, provided your total super balance is below the general transfer balance cap and you have not exceeded your non-concessional cap.
Spouse Contribution Offset
Contribute to your spouse’s super where they earn less than $40,000 and you can claim a tax offset of up to $540 a year. The offset is 18% of your contribution, calculated on a maximum $3,000. You get the full offset when your spouse’s income is below $37,000; it tapers by a dollar for each dollar of income above that and disappears at $40,000.14Australian Taxation Office. Spouse Super Contributions The contribution itself is treated as a non-concessional contribution in the receiving spouse’s fund and counts towards their non-concessional cap.
First Home Super Saver Scheme
Voluntary contributions can be pulled back out for a first home deposit under the First Home Super Saver scheme, up to $15,000 per financial year and $50,000 in total.15Australian Taxation Office. First Home Super Saver Scheme Concessional and non-concessional voluntary contributions both qualify; compulsory Super Guarantee amounts do not. On release, you get 100% of eligible non-concessional contributions and 85% of eligible concessional contributions, plus deemed associated earnings. The 15% held back on concessional amounts reflects the tax the fund already took on the way in.