Types of contributions

There are many different ways that members can contribute to their SMSF, and trustees should be aware that there are rules around who, how, when and what can be contributed to your super fund.

Whether a contribution is allowed depends on the type of contribution, the age of the member and the amount of the contribution.

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. 

Changes in 2017 have meant that anyone is allowed to claim a personal tax deduction for contributions as long as they meet the criteria for claiming them.

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

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: 

  • personal contributions you make from your own money for which you do not claim a tax deduction (generally any money on which you have already paid tax)
  • contributions you make for your spouse (or vice versa) 
  • contributions you make for a child under age 18 
  • amounts transferred from a foreign super fund that do not count towards your Australian fund’s assessable income 

Don’t forget that all the usual tax benefits apply once the money is in your SMSF.