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 your super.
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.
Changes to super contributions in 2017
Super contribution limits will change on 1 July 2017. Find out
more details on what is changing and how it will affect you on the
Australian Tax Office (ATO) website.
Super concessional caps
There is a limit on how much you can put into super each year by
Most people can contribute up to $30,000, including your
employer's 9.5% super guarantee contribution. This is called the
concessional contributions cap.
There are higher concessional caps for people closer to
retirement, people aged 50 and over can contribute $35,000
including your employer's 9.5% super guarantee contribution.
For more details see the ATO's information on key superannuation
rates and thresholds.
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 $2,400 in tax, with
the extra money going into her super fund.
||Salary sacrifices $10,000
money into super
||$69,353 ($2,400 better
Warning - Setting up salary sacrificing and super guarantee
If you want to sacrifice some of your salary to super it is very
important that you enter into a formal written agreement with your
employer. It is best to include the details in your terms of
Setting up a formal agreement ensures your employer calculates
their 9.5% super guarantee (SG) contribution based on your original
salary. If this is not agreed, your employer may be entitled
to reduce their usual contribution by the total amount you salary
sacrifice or pay a lower contribution base on your new 'reduced'
Make sure to check you're getting what you're entitled to. Do
this by checking online or by reading your annual statement from
your super fund.
If you think you're not getting paid the correct amount of super
talk to your employer. Ask how often they're paying your super,
which fund they're paying it to and how much they're paying.
If your employer is not paying your super, report it to the ATO
Report unpaid super contributions from your employer.
See the ATO for more details on salary sacrifice arrangements for
You can also read our webpage on salary
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 $51,021 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 $36,021 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
Find out how much co-contribution you can get.
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
Jay, 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 government.
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 contribution.
Case study: Ewan gets a low income super contribution from the
Ewan, 26, earns $36,000 a
year from his job as a personal trainer. Over the last
financial year Ewan's employer puts $3,420 into his super
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
To help you work out the best way for you to grow your nest egg,
we've developed a super contributions optimiser. This will help you
decide whether it's better for you to make before or after tax
contributions, or a combination of both.
Even small contributions can make a big difference over
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: 23 May 2017