Concessional Super Contribution

How to claim DIY non-concessional superannuation contribution as concessional superannuation contribution?

I like the simplicity of depositing additional super contributions at any time without having it set up with payroll. Without extra paperwork, the additional contribution amount can be $50, $1,000 or anything in between. At the end of the financial year, I could then claim a tax deduction for the after-tax super contribution by submitting a paper form to the ATO right before filing in a tax return. It could have been a digital form, but I can’t explain why the tax form still has to be on paper and requires a postal address.

Recently, I learned that the purpose of the form is to convert the non-concessional super contribution (aka the after-tax super contribution amount) to a concessional contribution for that tax return period. So that’s what the annoying paper form is all about. Of course, suppose you have already exceeded your annual concessional contribution cap. In that case, you will have other things to deal with, like Division 293.

For individual taxpayer, the current annual concessional contribution cap is $27,500 (it will be $30,000 from July 2024), whereas the annual non-concessional contribution cap is now $120,000 (with a lifetime cap of 1,900,000). Failing to convert your super contribution accordingly means you will miss out on all the tax savings.ย 

So what happens if you put too much money into your annual contribution, after carry-forward rule is applied?

From 2017-18 financial year onwards, if you have exceeded your non-concessional contribution cap, the ATO will ask your super fund to release the required amount to the ATO on your behalf. The ATO will also amend your income tax assessment to include the associated earnings and you will pay tax on the associated earnings at your marginal tax rate. The ATO will also use the money released to pay any tax or government debts and refund any remaining balance to you.

Australian Tax Office

PS: The Division 293 calculation is quite interesting. Check here!

More information:

Concessional contribution—too-much-can-mean-extra-tax/?page=2

Non-concessional contribution—too-much-can-mean-extra-tax/?page=7

Division 293—information-for-individuals/?=redirected_division293