Even small additional contributions to your account each month can make a big difference to the size of your super account.
There are two ways you can make extra contributions to your super: before tax and after tax.
Before tax (concessional contributions)
You can make extra contributions by ‘sacrificing’ some of your salary. The extra contributions go directly from your salary into your super, the same way your normal super guarantee contributions are paid by your employer.
Your take home pay will be less, however salary sacrificing will reduce your annual assessable income, so the potential tax benefits are worth considering. Your concessional super contributions are taxed at 15%. If your income tax rate is higher than 15%, then you will save money on tax.
You should seek financial advice about whether salary sacrifice is right for you. Also check that your employer will continue to calculate their SG contribution and your other entitlements on your pre-sacrifice salary.
After-tax (non-concessional contributions)
You can make extra contributions in lump sums from your normal take home pay. This is not taxed as you’ve already paid the tax on your income. You just need to ensure that:
You meet the work test requirements:
If you are over age 67, you will need to meet the governments work test requirements. See the ATO website.
You haven't gone above the Contribution Cap:
There are annual limits on the amount of after-tax contributions you can make into your super account each financial year. The non-concessional contribution cap is $110,000 for the 2021-22 financial year.
See How Super is Taxed.
Your super contributions are counted from the date the payment is allocated to your super account and not when the payment is sent. If you are making a contribution before the end of the financial year, you need to allow enough time for your contribution to be received and allocated to your super account.
Government top-up for low income earners
If you earn less than $56,112 p.a. and make a personal contribution into your super, you may be eligible for the Government co-contribution and receive up to $500 extra into your super each year. For eligibility criteria, see the ATO website.
Tax offset for couples
There may be times during your working life where your partner may work part-time, take time off to raise children, study, look after others or recover from an illness. This can impact their super savings, leaving them less in retirement.
Could you split some of your super contributions to your partner's super account?
If your partner is on a low income or no income and you make a contribution to their super, not only will you help grow their super but you can claim a tax offset of up to $540. See if you are eligible:
- Both you and your spouse are Australian residents when you made the contribution.
- A spouse can be of any sex and include de facto relationships.
- You and your spouse are not living separately or apart on a permanent basis when you made the contributions.
- Contributions were not tax deductible.
- The contributions need to be made to a complying fund (like REI Super) during the same financial year as claiming the offset.
- Your spouse’s assessable income total reportable fringe benefits and employer superannuation contributions are less than $41,112.
- Your spouse does not have a super balance of $1.6 million or more.
Spouse contributions are classed as non-concessional contributions and tax rules apply. To set up a spouse contribution you need to complete the Contribution splitting with spouse form.
Tax rules, including the contribution caps and other figures shown here are subject to change from year to year due to changes in legislation or annual indexation. For up to date information about the contribution caps and other figures, go to www.ato.gov.au.