Super contributions 101

There are a number of ways to make or receive contributions to your super account. Let us count the ways and help you work out the best fit for you.

Grow your super…

you hear it often enough, but it can be hard to work out just why it’s so important and how to go about it. Here’s why.

  • Super is your money and will basically help to pay you an income once you leave the workforce. It’s all about being able to live a great life after work.
  • Super contributions are taxed at 15% instead of your marginal tax rate. Why not make the most of it?
  • Thanks to the power of compound interest, every extra dollar that goes into super will generate investment earnings that will be reinvested again and again—growing your savings faster.

One of the easiest ways to grow your super is via contributions—money coming into your super account. Especially if you have a super gap between how much money you’ll need to achieve your desired lifestyle after work and how your super is tracking to reach that goal. In this case, super contributions can make a real difference and the sooner you start, the better the outcome.

The question is what’s the most suitable contribution option for your personal circumstances. Here are your options.

 

Super Guarantee contributions

This is the super money your employer puts into your super account, on top of your salary and wages.

Currently, this is 10% p.a. of your salary and wages and it’s legislated to progressively increase to 12% p.a. from 1 July 2025.

Salary sacrifice contributions

Contributions to super from your before-tax pay are deducted from your total salary before income tax has been calculated, and forwarded to your super account. This means your taxable income is reduced, and your salary sacrifice contribution gets taxed at only 15%.

Two things to note: Check with your employer to make sure they offer salary sacrificing and watch out for the $27,500 contribution cap per year.

Low Income Superannuation Tax Offset (LISTO)

If you earn $37,000 or less a year, you may be eligible to receive a LISTO payment directly into your super account.

The amount, up to $500 annually, will be 15% of the before-tax contributions you or your employer made to your super account during the financial year.

After-tax contributions

A simple way to deposit your money into super is from your salary or wages after your income tax has been deducted. You can also make one-off after-tax contributions to your account with any savings you have.

Just use BPAY®: Biller code: 646596 and Reference number: Your Customer Reference Number. (Not sure what it is? Log in to your online account and go to the ‘Contributions’ page.)

It’s simple really and while there’s a $110,000 contribution cap per year, in order to accommodate larger contributions, people under age 65 are allowed to bring forward two years of contributions, up to a total of $330,000 in contributions in a single year.

Alternatively, you can claim after-tax super contributions (made since 1 July 2017) as a tax deduction when you’re doing your tax return, lowering your taxable income.

Government co-contributions

If you earn less than $56,112 a year before tax and make after-tax super contributions, you may be eligible for a co-contribution from the government.

The co-contribution is 50c for every $1 you contribute, up to a maximum co-contribution for the year of $500 if you earn less than $41,112. The maximum of $500 is reduced by 3.33c for each $1 you earn over $41,112.

Spouse contributions

You can help boost your spouse’s retirement savings by making a contribution to their super account. This can be a good idea if your spouse is a stay-at-home parent or has had time out of the workforce.

If your spouse earns low or no income, you may be able to claim a tax offset of up to $540 (18% on up to $3,000 of contributions) on after-tax contributions you make to your spouse’s account.

You can also transfer some of the contributions made to your super into an account for your spouse (including de facto of the same or different sex)—known as contribution splitting.

Now that you have an idea of your options, it’s important to work out what suits you best. We’re happy to have a chat, so please call us on 1800 555 667. Or you can get targeted, personalised and phone-based advice  on contributions, often offered at no cost to you. Let’s get this sorted!
 
 
Whichever option you choose, one thing is certain—making a contribution is super easy.