What Are Non-Concessional Contributions?
Non-concessional contributions (NCCs) are payments made into your super from your after-tax income. Since you've already paid tax on this money, these contributions are not taxed again when they enter your super fund.
Why Make Non-Concessional Contributions?
Tax-Free Investment Earnings
While the contributions themselves don't get a tax break, the investment earnings on those contributions are taxed at just 15% within super (or 0% in retirement phase). This is much lower than investing outside super.
Example: $10,000 earning 7% outside super might net you 4.5% after tax. Inside super, you keep more of the returns.
Building Retirement Wealth
NCCs allow you to boost your super beyond what concessional contributions allow, especially useful if you:
- Receive an inheritance
- Sell an asset (property, shares)
- Have excess savings
- Are a low-income earner (limited tax benefit from concessional)
Spouse Contributions
You can make NCCs to your spouse's super and potentially receive a tax offset of up to $540.
The Non-Concessional Cap
For 2024-25, the non-concessional contributions cap is $120,000 per year.
Bring-Forward Rule
If you're under 75, you can "bring forward" up to 3 years of NCCs in a single year, allowing a maximum of $360,000 at once.
Important: Once triggered, the bring-forward period locks in for 3 years. Any NCCs in those years count against the total.
Total Super Balance Restrictions
Your ability to make NCCs depends on your Total Super Balance (TSB) on June 30 of the previous year:
| TSB on June 30 | NCC Cap |
|----------------|---------|
| Under $1.66m | $120,000 |
| $1.66m - $1.78m | $240,000 (2-year bring-forward) |
| $1.78m - $1.9m | $120,000 (no bring-forward) |
| $1.9m or more | $0 (no NCCs allowed) |
No Contributions Tax
Unlike concessional contributions, NCCs are not taxed on entry. Your full contribution amount goes into your account.
Example: A $50,000 NCC means $50,000 in your super account (vs $42,500 for a concessional contribution after 15% tax).
Government Co-contribution
Low to middle-income earners making NCCs may receive a government co-contribution:
- Earn under $43,445: Government matches 50 cents per $1, up to $500
- Earn $43,445 - $58,445: Reduced co-contribution
- Earn over $58,445: No co-contribution
Requirements:
- Make personal (not salary sacrifice) NCC
- Lodge a tax return
- Have 10% or more of income from employment
- Be under 71 years old
Comparing Concessional vs Non-Concessional
| Factor | Concessional | Non-Concessional |
|--------|-------------|------------------|
| Tax on entry | 15% | 0% |
| Annual cap | $30,000 | $120,000 |
| Tax deduction | Yes | No |
| Best for | High income earners | Lump sum contributions |
| Div 293 applies | Yes (if over $250k) | No |
When to Use Non-Concessional Contributions
After Selling Assets
When you sell property or shares and have cash to invest, NCCs can get that money into the tax-effective super environment.
Inheritance
Received a windfall? NCCs let you boost super beyond normal limits.
Lower Income Years
If your income is low (under $45,000), the tax benefit of concessional contributions is minimal. NCCs might make more sense.
Approaching Retirement
Boost your super quickly before retiring, especially using the bring-forward rule.
Maxed Concessional Cap
If you've hit the $30,000 concessional cap but want to contribute more, NCCs are your option.
Re-contribution Strategy
Some retirees use a "re-contribution strategy":
- Withdraw a tax-free lump sum from super
- Re-contribute it as an NCC
This can reduce the taxable component of your super, potentially reducing tax for beneficiaries if you pass away.
Key Considerations
- Total Super Balance: Check your TSB before making large NCCs
- Bring-forward trigger: Understand the 3-year commitment
- Excess contributions: NCCs over the cap are taxed at your marginal rate plus refunded to you
- Preservation: Like all super, NCCs are locked until retirement
- Timing: Contributions must reach your fund by June 30
Strategies
Downsizer Contributions
If you're 55+ and sell your home, you may be able to contribute up to $300,000 each (outside the NCC cap) as a "downsizer contribution."
Spouse Contribution Splitting
Make NCCs to your lower-balance spouse to even out super balances for retirement.
Regular vs Lump Sum
Consider whether regular NCCs or using bring-forward with a lump sum suits your situation better.