There are two types of superannuation contributions, concessional contributions and non-concessional contributions.
Concessional Contributions
Concessional contributions are contributions made on your behalf by someone other than your spouse for example, an employer. They also include contributions you make personally but for which you claim a tax deduction. Not everyone is allowed to claim a tax deduction for their own contributions – generally it’s people who are self-employed or not working.
The reason these contributions are called “concessional” is that they are being treated in a favourable way from a tax perspective. They give rise to a tax deduction for whoever makes the contribution and they are only taxed at 15% when they are received by your SMSF. Beneficial tax treatment like this is often described as giving tax concessions, hence the name, concessional contributions.
Non-concessional Contributions
The common types of non-concessional contributions are:
Unlike concessional contributions, non-concessional contributions don’t create any special tax treatment for the contributor, hence they are called “non-concessional”. Because they receive no tax concessions on the way into your fund, the fund doesn’t have to pay any tax on them when it receives them. Don’t forget that all the usual tax benefits apply once the money is in your SMSF.