Grow your nest egg
If you want to retire comfortably your employer's super
contributions may not be enough to build your nest egg. By making
extra contributions, you will boost the amount of super you have
when you stop working. Start now so you can relax later.
Why grow your super?
There are lots of good reasons to grow your super:
- You might live to be 100 so your money needs to last
- The cost of living will increase over time
- The age pension alone will not be enough for
a comfortable lifestyle
- Super gets special tax treatment
- Low income earners may be eligible for bonus government
Before you start making extra super contributions, take a look
at your finances as a whole. If you have high interest credit card
debt or personal loans, it may be better to pay these debts off
first. If you have a home loan, read our super vs
mortgage webpage to help you work out whether contributing
extra to super or paying down your mortgage is the better option
Ways to boost your super
Your employer puts an amount equal to 9.5% of your salary into
your super. Employers must pay this money into your super at least
once a quarter, see employer contributions for more
Your employer contributions alone are unlikely to be enough to
maintain your current lifestyle when you stop work but you can do
your bit to grow your super.
Changes to super in 2017
Super contribution limits and tax concessions changed on 1 July
2017. Details of the changes are available on the Australian Tax Office (ATO) website.
Make concessional super contributions
If you are employed you and your employer can agree to pay a
portion of your pre-tax salary as an extra contribution to super.
This is commonly known as a salary
sacrifice. It can be tax-effective if you earn more than
$37,000 per year.
Concessional contributions are capped at
$25,000 per financial year. This means the total of your employer
and salary sacrificed contributions must not be more than $25,000
each year, see salary sacrifice super for more
Make non-concessional super contributions
Simply deposit your personal money into your super. These are
called after-tax super contributions because you have already paid
tax on the money. This is different from salary sacrificing, which
happens before your income is taxed.
You cannot claim a tax deduction for contributions that you want
to keep as non-concessional contributions. The cap
for non-concessional contributions is $100,000 per financial year.
If you are under age 65 you can bring forward up to 2 years
non-concessional cap, allowing you to contribute up to $300,000 at
a time, depending on your super balance.
If you earn less than $52,697 per year (before tax) and make
after-tax super contributions, you are eligible for contributions
from the government. This is called the government
If you earn less than $37,697 the maximum co-contribution is
$500 based on 50c from the government for every $1 you contribute.
The amount of the co-contribution reduces as your earnings
To receive the co-contribution you will need to lodge a tax
return for the year. The government will then work out how much you
are entitled to. If you are eligible, the government will pay the
co-contribution directly to your fund. See the ATO for more details
on super co-contributions.
Low income superannuation tax offset
If you earn $37,000 or less you may also get a 'low income
superannuation tax offset' from the government. The amount, up to
$500 annually, will be 15% of the concessional contributions you or
your employer made to your super account during the financial
You will get this payment whether or not you add extra money to
your super. The ATO will automatically make these payments if you
meet the criteria. Make sure your super fund has your tax file number so you don't miss
Case study: Ewan gets a low income super tax offset from the
Ewan, 26, earns $36,000 a year from his job as a personal
trainer. Over the last financial year Ewan's employer put $3,420
into his super account.
Because Ewan provided his tax file number to his super fund the
ATO works out he is eligible for a low income super tax offset from
the government. After Ewan lodges his tax return the government
adds $500 to his super account.
Work out your best mix of super contributions
If you can afford to contribute more to your super, you'll want
to know the best way to grow your nest egg.
Work out whether to make extra contributions before or after
You can make sure you are receiving your super contributions by
checking with your super fund or logging into your myGov
If you make personal after-tax super contributions you can claim
them as a tax deduction, effectively making them concessional
contributions. This system helps self-employed people or
those with variable work patterns.
Spouse contribution splitting
You can also split your employer super contributions with your
spouse. Contribution splitting can only be done after the end of a
financial year. Your super fund will be able to guide you through
the process. See the ATO's fact sheet on contributions
Case study: Lei builds her super
Lei, 40, is working part-time after
taking some time off to have her three children. During the 10
years she was a full-time mum, no contributions were made to her
super. Lei is worried that she won't have enough super when she
After talking with her husband, they decide to take advantage of
the spouse super-splitting rules. Each year Lei's husband will
divide his employer's super contribution between his fund and
Lei's. This will help her build her nest egg.
Spouse super contributions
If your spouse earns a low or no income, you may be able to
claim a tax offset of up to $540 if you make contributions to your
spouse's complying super fund.
Go to the Australian Taxation Office (ATO) for the rules on the
superannuation spouse contribution tax
Video: Splitting super with your spouse
Splitting super with your spouse video
Columnist and presenter Jane Caro explains how she and her
husband split their super contributions, as part of ASIC's
MoneySmart Women talk money video series.
First home super
The first home super saver (FHSS) scheme allows first home
buyers to save a home deposit within their super fund. From 1 July
2017 any personal voluntary contributions you make to your super
can be withdrawn to help buy or build your first home.
Under the FHSS scheme, you can withdraw up to $15,000 of
eligible contributions made over a financial year or up to $30,000
in total for all years, plus an amount that represents deemed
Voluntary contributions made to defined benefit super funds are
not eligible for release under the FHSS scheme.
Withdrawals can be made from 1 July 2018. To be eligible to
withdraw funds under the FHSS scheme you must:
- not have owned property in Australia before
- be at least 18 years old
- not have withdrawn money under the scheme in the past.
Non-concessional contributions can be withdrawn tax free.
Concessional contributions and total earnings will be taxed at
marginal tax rates with a tax offset of 30%. You must enter into a
contract to buy or build your first home within 12 months of making
a withdrawal under the FHSS scheme or you will have to recontribute
the amount back to super or pay additional tax on it.
For more information see the ATOs first home super saver scheme
Downsize your home and put
money into super
If you have owned your home for more than 10 years and are
considering downsizing you will soon have
another option for investing the excess proceeds from the sale of
From 1 July 2018, if you are aged 65 or older you are able to
contribute your downsizing proceeds from the sale of your principal
residence to super as a non-concessional contribution. The
contribution can be up to $300,000 per person and is in addition to
any other voluntary contributions you make under existing
Making extra super contributions is a great way
to boost your super savings and increase the likelihood of enjoying
a happy and comfortable retirement.
Last updated: 22 Oct 2018