The two major types of super contributions are concessional and non-concessional.

Concessional contributions are pre-tax contributions which are generally made in three ways.

1. Firstly, if you are employed, your employer will generally contribute 9% of your salary into super for you (known as Super Guarantee or SG contributions).

2. Secondly, if you are an employee you can contribute using some of your pre-tax salary directly into super. This is known as ‘salary sacrifice’.

3. Thirdly, if you are an eligible person (eg self-employed) you can make personal deductable contributions (conditions apply).

Non-concessional contributions are after-tax contributions. Examples of these include:

–    personal contributions made by a person where a tax deduction is not claimed

–    a spouse contributing to their partner’s super fund

–    a government co-contribution

The government places a limit or cap on the total amount you can contribute to super in any one financial year. The caps vary depending on your age and the type of contribution.

Super is a very tax effective investment over the long term. We talk to our clients about a number of strategies that can maximise your superannuation today which can make a real difference to your future retirement savings.

‘Salary sacrificing’ means making a super contribution from your gross (pre-tax) salary. Your sacrificed super contributions are taxed at 15%, and at the same time, by reducing your taxable income you may move to a lower income tax bracket.

Get a government co-contribution of up to $1,000

If your total income is $31,920 pa or less and you make a $1,000 after-tax contribution to super, the government will give you a helping hand by contributing $1,000 to your super account. The co-contribution reduces progressively by 3.33 cents for every dollar you earn over $31,920 pa and ceases once your total income reaches $61,920 pa.

If you are married or in a de facto relationship, you can make a contribution to your spouse’s super and get a two-fold benefit. Firstly, a maximum tax offset of up $540 pa depending on your spouse’s income. Secondly, the peace of mind knowing that you’re helping save for your spouse’s retirement.

If you are no longer working or if you are self-employed, it may be possible to sell an asset (for example, an investment property) and tax effectively contribute some of the proceeds to your super. An eligible person may claim a tax deduction for personal super contributions made during a financial year (up to concessional caps of $25,000 or $50,000 depending on your age).

Also, you may be an ‘unsupported person’ (eg retired or not working) and can claim the same tax deductions as a self-employed person.

To learn more about making super contributions and what the best option for you is, click here to contact us for further information.