Super contributions explained

As a long-term savings strategy, there are many ways you can contribute to your superannuation fund throughout your lifetime. And while this makes it incredibly flexible, it can be a little confusing. So, if you’re wondering what superannuation contributions you can make, our simple guide will help.

Concessional contributions
These are contributions that are made pre-tax and there is a limit to how much can be contributed. Currently, the limit if you were over 49 years of age on 30 June 2016 is $35,000.

Employer contributions
Generally, as long as you earn more than $450 in a month, your employer must make employer contributions under the Superannuation Guarantee Act. Currently the rate that must be paid is 9.5 per cent of your ordinary time earnings into a superannuation fund of your choice or your employer’s default fund.

Salary sacrifice
Some employers allow you the option to boost your superannuation balance by entering into a salary sacrifice arrangement. Under such an agreement, your employer makes pre-tax contributions to your nominated fund on your behalf. This has the effect of lowering your assessable income, which may drop you into a lower tax bracket. It does mean a reduction in the money you take home, but the benefit is that you may pay less tax as these contributions are taxed at 15 per cent when they go into your super, rather than being taxed at your marginal tax rate. It’s not for everyone – talk to your HR or Payroll departments to find out if they offer salary sacrifice, and if you’re considered a low income earner, you may be better off receiving the money as income instead of deferring it until retirement. 

Non-concessional contributions
These are contributions to your super that are made after tax and also have limits as to how much can be contributed

Personal contributions 
You can make after-tax contributions of $180,000 per annum to your superannuation fund. If you exceed this cap in a financial year, and you’re under 65, you will trigger the ‘bring forward rule’ which is a three year period in which you can make up to $540,000 of non-concessional contributions. For instance, if you made a contribution of $250,000 in a financial year then you could make an additional $290,000 over the next two years. This can be particularly useful if you have received an inheritance or sold an asset such as property.

If you are over 65 you can keep making non-concessional contributions until you’re 75, as long as you pass the work test.

Spouse contributions
If your spouse does not work or is a low-income earner, you can make contributions on their behalf. Although these contributions are made post-tax, you may be able to claim a tax offset depending on your spouse’s income.

Superannuation co-contributions
If you earn less than $51,021 and you choose to make non-concessional contributions to your superannuation, the Government may add to these contributions. This is a great way to give your superannuation balance a boost if you can afford to do so.

Using a combination of these contributions can help you maximise your superannuation balance but you should seek professional financial advice on how best to manage your retirement savings.

Make your super work harder for you.
Visit australiansuper.com/56matters to get started.


This article has been sponsored by AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, the Trustee of AustralianSuper ABN 65 714 394 898. The views expressed are those of YourLifeChoices and not necessarily the views of AustralianSuper. The article contains general information and you should consider if it is right for you.

Salary sacrifice contributions are concessional contributions and, along with any contributions by your employer, are subject to concessional contribution caps. Talk to your payroll manager to see whether your employer allows salary sacrifice into super.

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