There are several ways to contribute to your super, each with different rules and benefits.

You've probably heard the term's Concessional and Non-Concessional Contributions a bunch of times before - the simplest way to describe this difference is that the government wants to incentivise Australians to invest in their retirement (through superannuation) to incentive this, a set (capped) amount of contributions can be made each year that get taxed at a lower rate (usually 15%) instead of your normal income tax rate (i.e. this is the "Concession").

There are a few different ways that contributions can flow that will be 'concessional'

Example 1 - Employer Super Guarantee Contributions:

You make $100,000 + Super. Your employer pays the 12% p.a Super Guarantee to your Super Fund (e.g. Australian Super, Aware Super etc), of that 15% or $1,800 is paid as a 'Contribution' Tax to the ATO, the remaining $10,200 is invested in your superannuation account.

Example 2 - Other compulsory employer contributions

You make $100,000 + 15% Super, as part of your award (e.g. You work in the University Sector). Your employer pays the 12% p.a Super Guarantee to your Super Fund + 3% additional "Other compulsory employer contributions", of that 15% or $2,250 is paid as a 'Contribution' Tax to the ATO, the remaining $12,750 is invested in your superannuation account.

You can model this in Canwi from the "Add Income" model by adjusting the Super Contribution percentage from the Super Guarantee Rate (12%) to a higher figure (e.g. 15%) we automatically assume that this is a 'compulsory employer contributions'. There is a slight difference in the way that Compulsory Employer contributions and Employer Contributions you influence are treated when calculating various definitions of income for Income Tax / Help Debt Repayment Income - Canwi calculates these for you automatically.

Example 3 - Salary Sacrifice and other employer contributions you influence

You make $100,000 + 15% Super, as part of either your individual agreement with your employer (e.g. When you joined the organisation you negotiated that superannuation would be paid at X% instead OR you requested that your employer make salary sacrifice contributions on your behalf). Your employer pays the 12% p.a Super Guarantee to your Super Fund + 3% additional "Salary Sacrifice and other contributions you influence", of that 15% or $2,250 is paid as a 'Contribution' Tax to the ATO, the remaining $12,750 is invested in your superannuation account.

We do not currently provide the ability to model this form of contribution in Canwi.

Example 4 - Personal Tax Deductible Super Contribution

You make $100,000 + Super. Your employer pays the 12% p.a Super Guarantee to your Super Fund (e.g. Australian Super, Aware Super etc). You decide you want to contribute an additional $3,000 to your super this year so transfer money from your bank account to your super-fund/account.

At first, this looks the same as a non-concessional contribution - you’re using after-tax money. The difference is what you do next.

If you submit a “Notice of Intent to Claim” and claim a tax deduction, this $3,000 is treated as a concessional contribution. This means:

So even though the money started as after-tax, claiming the deduction effectively “converts” it into a concessional contribution.

In Canwi this is currently the best way to simulate a salary sacrifice arrangement as it nets out to the same.

Example 5 – Non-Concessional (After-Tax) Contribution

You make $100,000 + Super. Your employer pays the 12% Super Guarantee to your super fund. You decide to contribute an additional $3,000 from your bank account to your super.

This starts the same way as Example 4 - you’re contributing after-tax money. The difference is what you don’t do next.

If you do not submit a “Notice of Intent to Claim” and do not claim a tax deduction, this $3,000 remains a non-concessional contribution. This means:

So the key difference is simple: claiming a deduction makes it concessional - not claiming one keeps it non-concessional.

Note: Just because a contribution is “concessional” doesn’t automatically mean you’ll save tax. Concessional contributions reduce your Taxable Income, but if your income is already low (for example, below the tax-free threshold), you may not actually benefit from the tax deduction.