Now that you know what a non-consessional contribution is, let's take a look at Consessional contributions....

In simple terms, a concessional contribution is any contribution that is not a non-concessional contribution.

It is commonly thought that concessional contributions are simply contributions in respect of which a tax deduction has been claimed. This is not the case. For example, any "third party" contribution made to a superannuation fund (such as a parent making a contribution for an adult child) is a concessional contribution whether or not the contributor claims, or is eligible to claim a tax deduction. By way of further example, an employer may make a contribution and doesn't intend to claim a deduction for the contribution. Even though the employer doesn't intend to claim the tax deduction, the contribution is still treated as a concessional contribution.

The incidence of reported excess concessional contributions have risen significantly since the halving of the concessional contribution caps that took effect from 1 July 2009.

The present cap on concessional contributions is $25,000, with those aged 50 and over having access to a transitional concessional cap of $50,000 for the current financial year. This transitional arrangement only continues until 30 June 2012. Any extension beyond that date (as announced by the Government in 2010) is still subject to the successful passage of amending legislation.

Some common traps affecting concessional contributions include:

• Ignoring Superannuation Guarantee contributions - watch the timing as contributions made either late or early may result in the contribution falling into a different financial year;
• As many bonuses are subject to Superannuation Guarantee, an unexpected bonus may result in the concessional contribution cap being breached;
• Failure to review salary sacrifice arrangements as a result of the halving of the concessional contribution cap; and
• As with non-concessional contributions - life insurance arranged through super may affect the concessional contributions cap

The above Information kindly provided by Professional Investment Services Pty Ltd