Contributing extra to super
Super building blocks
Making super contributions is a great way to boost your nest
egg. You can build your super by making after-tax contributions
from your own money or by salary sacrificing.
You've probably heard someone talking about 'salary sacrifice'
at your family barbeque. But what does it actually mean?
If you earn more than $37,000, salary sacrifice can be a good
way to grow your super. It involves giving up some of your pay and
putting it into your super instead. You will save tax and boost
Salary sacrificing is when you ask your employer to redirect a
portion of your pay as a contribution to super. By 'sacrificing'
some of your before-tax salary and putting it into your super fund,
you get taxed at the special rate of 15%. That's why it's also
known as 'concessional contributions' because there are tax
concessions with these types of contributions. This suits higher
income earners due to their higher marginal tax rate.
Case study: Crystal boosts her super by salary sacrificing
Crystal earns $90,000 before tax, excluding her
employer's super contribution.
If Crystal decides to redirect $10,000 of her pay into salary
sacrifice super contributions, she will save $2,350 in tax, with
the extra money going into her super fund.
||Salary sacrifices $10,000
money into super
||$69,753 ($2,350 better
Super concessional caps
There is a limit on how much you can put into super each year by
Most people can contribute up to $25,000, including your
employer's 9.25% super guarantee contribution. This is called the
concessional contributions cap. There are higher concessional
caps for people closer to retirement:
- People aged 60 and over can contribute $35,000 including your
employer's 9.25% super guarantee contribution.
- From July 1, 2014 people aged 50 and over can contribute
$35,000 including your employer's 9.25% super guarantee
For more details see the ATO's information on key superannuation
rates and thresholds.
Setting up salary sacrificing
If you want to sacrifice some of your salary to super you should
enter into a formal agreement with your employer. It is best to
include the details in your terms of employment. This ensures your
employer calculates their 9.25% super guarantee contribution on
your original salary.
See the ATO for more details on salary
sacrifice arrangements for employees.
You can also read our webpage on salary packaging.
After-tax contributions are known as 'non-concessional
contributions' because you don't receive a tax deduction. After-tax
contributions are the simplest way to add to your super as you
simply deposit your personal money into your super account.
If you can spare the money, you can really boost your super
savings by making after-tax contributions. You will usually save
more by investing through super than by investing in the same assets outside super.
Contributions from your after-tax income don't get taxed when
your fund receives them because you have already paid tax.
However, there are limits to how much you can contribute to your
super before you have to pay tax. See the Australian Taxation
Office's information on super contributions -
too much super can mean extra tax.
If you earn less than $48,516 per year (before tax) and make
after-tax super contributions, you are eligible to get matching
contributions from the government. This is called the government
If you earn less than $33,516 the maximum co-contribution is
$500 based on $0.50 from the government for every $1 you
contribute. And just like that - you've made a 50% return on your
money! The amount of the co-contribution reduces the more you
To find out how much free money you can get, use our super
How can I get the government co-contribution?
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.
Assuming you're eligible, the government will pay the
co-contribution directly to your fund. See the ATO for more details
on super co-contributions.
Case study: Jay gets a co-contribution from the government
40, earns $28,000 a year from his part-time job. He decides to pay
an additional $40 per fortnight into his super fund. This small but
regular step will grow Jay's super significantly over time. In
addition, he qualifies for a super co-contribution from the
By the time Jay retires at 65, these additional amounts have
boosted his super by thousands of dollars.
Low income super contribution
If you are eligible and earn $37,000 or less per year, the
government may make a further contribution to your super. This
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.
You don't need to apply - the ATO will work out your eligibility
and it will be paid directly into your super account. Make sure
your super fund has your tax file number
so you don't miss out on the payment. If you are eligible, you will
receive the payment whether or not you lodge a tax return. However,
if you don't lodge a tax return the process will take up to 14
See the ATO's information on the low income super
Case study: Ewan gets a low income super contribution from the
Ewan, 26, earns $36,000 a
year from his personal trainer job. Over the last financial year
Ewan's employer puts $3,330 into his super account.
Because Ewan provided his tax file number to his super fund the
ATO is able to work out that he is eligible for a low income super
contribution from the government. After Ewan lodges his tax return
the government adds $500 to his super account.
Getting the most out of your super
Use our super contributions optimiser to work out the best
way for you to grow your nest egg.
Contributing extra to super can really boost
your super nest egg. But make sure you know all the rules and
consider the different ways to contribute more to super before you
dive in. Start with our range of super and retirement
Last updated: 10 Dec 2013
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