Despite changes to its governing rules, superannuation remains, for most people, a tax-effective environment in which to save for retirement. Here’s a quick Q&A on the ‘what, why and how’ of contributing to superannuation .
Most super contributions and the investment earnings within super funds are taxed at a maximum rate of 15%. As this is lower than the marginal tax rate for people earning more than $18,200 per annum, less tax is paid on the money going into your super than if it was paid to you as normal income. The higher your marginal tax rate, the greater the benefit.
You can make personal contributions to super if:
You can claim a tax deduction for these contributions, but make sure you don’t exceed the $27,500 annual cap for concessional contributions or the $110,000 cap on non-concessional contributions.
Spouse contributions and government co-contributions can only be received up to a certain age provided you meet eligibility requirements.
You are eligible for mandated employer contributions, including Super Guarantee payments, regardless of your age.
The maximum you can contribute per financial year as a concessional contribution is $27,500, (increased from $25,000 on 1 July 2021). The unused portion of the cap can be carried forward and used in future years if your total super balance was under $500,000 on 30 June 2021 and certain requirements are met.
The maximum you can contribute per financial year as a non-concessional contribution is $110,000, or $330,000 if a further two years of non-concessional contributions are brought forward.
You cannot make non-concessional contributions in the current year if your total superannuation balance on 30 June 2021 exceeded the general transfer balance cap (the amount that can be transferred to a tax-free pension phase), currently $1.7 million.
A successful super contribution strategy can mean the difference between looking forward to retirement and dreading it. This article is provided as an overview. Super is a complex area and further rules apply in some situations. Getting things wrong can be costly so talk to your qualified financial planner and get the right advice based on your personal circumstances on the best ways to boost your super.
 As at May 2022
The purpose of this website is to provide general information only and the contents of this website do not purport to provide personal financial advice. JourneyNest strongly recommends that investors consult a financial adviser prior to making any investment decision. The contents of this website does not take into account the investment objectives, financial situation or particular needs of any person and should not be used as the basis for making any financial or other decisions. The information is selective and may not be complete or accurate for your particular purposes and should not be construed as a recommendation to invest in any particular product, investment or security. The information provided on this website is given in good faith and is believed to be accurate at the time of compilation.