In addition to your employer superannuation guarantee (SG) contributions, you can also make additional payments to your super which could offer attractive tax concessions. The tax you pay on additional contributions can vary on how you contribute - whether you use before-tax income (concessional) or after-tax (non-concessional); but both offer an opportunity to grow your super while saving on tax.

Understanding the difference between concessional and non-concessional contributions is important, as well as the personal contribution caps in place before you’re subject to pay extra tax.

Concessional

Contributions made using pre-tax income, such as salary sacrificing.

Non-concessional

Contributions made using after-tax income. This could also include gifted money that has already been taxed, such as an inheritance or contributions paid by your spouse.

Both of these contributions caps are revised by the ATO every year. Check out the ATO website for the current caps.

Self-employed?

Great news! You can take advantage of these ways to grow your super too. 

Set yourself up with a solid retirement fund by building up your savings and reducing your taxable income by making personal tax-deductible contributions to your super. 

1. Salary sacrifice

Some employers offer their employees an option to salary sacrifice super contributions on top of the compulsory SG contributions. This means instructing your employer to make additional contributions to your super using your pre-tax income. Unlike your SG, salary sacrificing is optional, but is a great option to help boost your retirement savings and save on tax, as it lowers your taxable income. Speak with your employer to check if it’s available to you.

What’s the tax benefit?

Since the contribution is made straight from your gross (pre-tax) pay, your contribution is  taxed at 15% instead of your marginal tax rate. Salary sacrificing may also reduce your marginal tax rate, as the sacrificed component is not counted as assessable income for tax purposes. As a result, this could help you reduce the income tax you pay.  

Contributions caps apply. Ensure you’re keeping track of your concessional contributions each year as exceeding the cap or if you earn more than $250,000, you may be subject to additional tax.

2. Government co-contribution

Low to middle income earners may be eligible to receive a government co-contribution to their super. How much you earn and contribute to your super determines whether you’re entitled and, if so, how much. The maximum co-contribution is $500 each year you’re eligible.

What’s the tax benefit?

A government co-contribution isn’t counted towards your taxable income, so you don’t pay any tax on it when it’s paid into your super.

3. Personal super contributions

You can also boost your super by making a personal contribution to your super fund from your after-tax income. These contributions will count towards your non-concessional contributions cap unless you’ve claimed a tax deduction for them. If you claim a tax deduction for personal super contributions, they become part of your concessional contributions.

You may be able to claim a tax deduction on any personal super contributions you make until you turn 75.

You can check if you’re eligible to claim a deduction for personal super contributions on the ATO website.

Keep in mind if you claim a deduction for your personal contributions, you won’t be eligible for a super co-contribution.

Selling your home? Individuals 55 years and older may be able to contribute up to $300,000 from the sale of their home into their super. These are called downsizer contributions. Check the ATO website for eligibility criteria.

What’s the tax benefit?

You don’t pay any contributions tax on non-concessional contributions as you’ve used your after-tax income.

Claiming your personal super contributions as a tax deduction, or making a downsizer contribution, may reduce your taxable income, and could reduce the total amount of tax you pay. The amount will vary based on your own personal circumstances.

4. Spouse contributions

You might decide to contribute to your spouse's superannuation for various reasons, such as providing support during extended leaves like parental leave. The ATO defines a spouse as another person (of any sex) who:

  • You’re in a relationship with, registered under a state or territory law; or
  • Although not legally married to you, lives with you on a genuine domestic basis in a relationship as a couple

What’s the tax benefit?

If you make contributions under the threshold to your spouse’s super fund or retirement savings account (RSA) during the financial year, you may be entitled to a spouse contribution tax offset if your spouse was under 75 at the time the contribution was made.

The maximum spouse contribution tax offset is $540. Learn more about eligibility on the ATO website.

5. Super contribution splitting

Some super funds let you transfer some of your before-tax contributions, usually from the previous financial year, to your spouse’s super account.

The maximum you can send to your spouse’s account is the lesser of:

  • 85% of your concessional contributions for the financial year; or
  • The concessional contributions cap for that financial year

What's the tax benefit?

The amount you send to your spouse’s super account won’t count towards their cap. This is because it was already counted against your cap when you made the original contribution. Learn more about contributions splitting.

Final things to remember about super contribution tax

Don’t get caught above the cap

Caps do apply to the contributions made to your super fund.

Once you exceed these caps, the tax benefits won’t apply and your super contributions could be taxed at up to 94%.

You can find out more about contribution caps on the ATO website.

Get professional advice

Tax can be complex, so you should consider discussing your personal situation with your accountant, taxation or financial adviser.