Superannuation contributions are usually made either by your employer or you personally. There are three kinds of superannuation contributions: concessional; non concessional and co-contribution.
Concessional superannuation contributions include employer contributions made under the superannuation guarantee rules, as well as any additional employer contributions made under a salary sacrifice arrangement. These contributions themselves are deductible to the employer and are taxed at a flat rate of 15% as they enter the superannuation fund, which is the lowest of the marginal tax rates on individual income. Concessional superannuation contributions may also be made by individuals if they are self employed and meet certain tests. The limit on concessional superannuation contributions is $25,000 per year for people under 50; and $50,000 for those over 50. If concessional contributions exceed these thresholds, a surcharge will be payable.
Non concessional superannuation contributions are not taxed when they enter the fund, and they are not deductible to the person making them. They are designed to allow people to shift more of their income producing assets into a tax effective environment in order to provide benefits in their retirement. The limit on non concessional superannuation contributions is $150,000 but if you are under 65 you can bring forward three years of contributions in the first year. Anyone under 75 years old can make a non concessional contribution, but if you are 65 years old you must satisfy a work test that requires you to work at least 40 hours over a 30 day consecutive period.
The third kind of superannuation contributions is the Australian Government co-contribution. If your income is less than $31,920 and you make a maximum $1,000 personal after-tax non-concessional superannuation contribution to a complying fund the Federal Government will make a $1,000 co-contribution payment on your behalf. The amount is reduced by 3.333 cents for every dollar you earn above $31,920 so the superannuation contributions from the Government cut out once your total taxable income exceeds $61,920.