There are two main types of 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 – for example, if you are over 67 you have to meet a "work test" to be allowed to claim a personal tax deduction for your contributions.
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.
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.
The common types of non-concessional contributions are:
Don’t forget that all the usual tax benefits apply once the money is in your SMSF.
You may hear about other types of contributions - downsizer contributions, government co-contributions, CGT exempt contributions and more. These are explained in more detail in our comprehensive guide (there is a link to this guide below).
The basic contribution limits for 2023/24 are:
|Concessional contribution limits
|Non-Concessional contribution limits
Members with total super balances under $500,000 may be able to carry forward up to 5 years of unused concessional contributions.
Some people are able to use special rules called the "bring forward" rules to contribute more than one year's worth of non-concessional contributions at once. For example, members with:
The limits apply to the total of your contributions even if they come from several sources. For example, if you have two jobs, the limit on your employer contributions is $27,500 in total, not $27,500 from each job. Similarly, if you’re making personal contributions and your spouse is also contributing for you, the combined limit is $110,000 p.a. However, your spouse also has their own $110,000 limit if they are still allowed to contribute to superannuation.
There are certain circumstances under which you can contribute more than these amounts. For instance, there are special extra limits if you sell a small business or receive a compensation payment for an injury. Both have particular conditions you need to meet – talk to an adviser if you think they might be relevant for you.
The amount you have in super for this purpose is a figure called your "total superannuation balance". It is generally just the amount that appears on your member statements from all your combined superannuation funds but for some people (e.g. those with special superannuation arrangements called defined benefits) it is calculated using a formula.
How to contribute to an SMSF
Contributions are normally made by arranging a bank transfer. However, they can also be made by transferring assets the contributor already personally owns. These are known as in specie contributions. An example of an in specie contribution is transferring ownership of publicly listed shares you already own from your name to the fund. Anything that your fund is allowed to buy from you can be used to make an in specie contribution.
The rules for contributions can be complex. Read our complete guide on all the rules for more information.