For most people, the majority of their super will come from their employment in the form of the 'Super Guarantee', a payment of the equivalent of 9.5% of pre-tax income. These contributions are usually taxed at 15%. This is known as the 'concessional' rate. See tax and your super below to find out more about this.
However, there are other ways to build up your super. Even small contributions can make a huge difference to your super pension pot.
If you put pre-tax income into super, you can build more super and pay less tax. This is because the money you salary sacrifice into super is usually taxed at 15% instead of at your marginal tax rate (32.5% if you earn over $37,000 or 37% if you earn over $87,000).
One way to put your pre-tax income into super is to ask your employer to put some of your pay into your super instead of putting it all into your bank account. This is known as 'salary sacrifice'.
- Personal tax deductible
This is the money you put into your super from your bank account and for which you do not claim a deduction. Because you're not claiming a deduction, and the payment is usually made after tax (exceptions may apply - for example for the self employed), you will not pay a contributions tax when this money enters your fund.
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Boost your spouse's super
You can help build your spouse’s* super by contributing to their super.
To split your before-tax contributions with your spouse, complete a Contributions splitting application form.
If your spouse earns $40,000 or less, you may be able to claim a tax rebate (or offset) for making an after-tax contribution to their super. To receive the rebate, you'll need to meet the ATO's eligibility rules.
To make an after-tax contribution to your spouse's super, complete a Spouse contribution form.
*To receive your contributions, your spouse must meet the age and work-hour requirements (contact us for more information). The law defines a spouse as another person (whether of the same or different sex) who is legally married to you, or a person who, although not legally married to you, lives with you on a genuine domestic basis in a relationship as a couple. Income, for the purposes of eligibility for the rebate, includes your spouse's assessable income, total reportable fringe benefits, and reportable employer contributions.
There are limits on the amount that can be contributed to your super for concessional tax treatment.
Before tax limits
The before-tax (concessional) contribution limit is $25,000 per financial year. This includes your employer super guarantee contributions, employer additional contributions, and salary sacrifice.
If you exceed the before tax limits, you may need to pay extra tax.
After tax limits
The annual cap for after-tax contributions is $100,000 (or $300,000 over three years brought forward). Once your total super balance reaches $1.6 million, no more after tax contributions will be able to be made.
If you exceed the after tax limit, you may need to pay extra tax. Note that if you're making payments under the Government's Downsizer contribution arrangements applicable from 1 July 2018.
Tax and your super
Most people only pay 15%* tax on before-tax contributions (such as the Super Guarantee and salary sacrifice).
No tax is deducted from after-tax personal contributions up to the contribution limits.
See How super works for more information.
Make sure we have your TFN
Make sure you don’t pay too much tax on your super by providing us with your Tax File Number (TFN).
*People earning over $250,000 may pay more tax. The definition of income here includes concessional contributions. If your adjusted taxable income excluding your concessional contributions is less than $250,000, but the inclusion of your concessional contributions pushes your income above $250,000, the additional 15% tax will only apply to the portion of the contributions that are above $250,000. This additional tax may be paid directly by you or released from the Fund. Adjusted taxable income includes taxable income, reportable employer superannuation contributions, deductible personal superannuation contributions, reportable fringe benefits amounts and other sources of income. This limit is applicable from 1 July 2017 - for the 2016/17 financial year, the adjusted taxable income limit was $300,000.
How you contribute to super when you are self employed will be dependent on whether you're set up as a sole trader or as a Pty Ltd company.
- Government co-contribution