Boost your super and minimise tax

If you are at the beginning of your working journey, building up your financial foundations, there are strategies you can use to make the most of your super while reducing the tax you pay. Keep in mind though, you will need to determine whether any of the strategies below will work for you.

Super and tax - What's in it for you?

When you’re young, retirement may feel very far away. However, what you do now, especially when it comes to your super contribution strategy, can make a big difference later in life. The good news is that contributing to super boosts your balance and can have some tax benefits too. In fact, maximising the tax benefits of superannuation can significantly enhance your super, and many people under 30 don't even realise it yet.

Example: Monica, 23, Marketing Coordinator
Monica earns $60,000 a year and has heard that she can contribute to super and save tax at the same time.

After researching, doing a health-check on her super and using our super contributions calculator, she decides to make after-tax (non-concessional) contributions of an extra $1,000 to her super. To make it feel more manageable, she thinks of it as less than $20 a week over a year.

She submits a Notice of intent to claim a tax deduction form and receives an acknowledgement from her super fund to claim the contribution as a tax deduction, which reduces her taxable income and lowers the amount of tax she pays. Her contribution is now treated as a concessional (before-tax) contribution, aligning with her super contributions strategy to build her savings efficiently.

There are also other ways to make voluntary contributions to your super for you to consider. 

Salary sacrifice, if available to you, is a convenient way to automatically contribute to your super from your ‘before-tax’ salary and is managed by your employer. This means you don’t have to claim a tax deduction at the EOFY.

If you make after-tax contributions to your super and do not claim a tax deduction, you could be eligible for a government co-contribution.  The super co-contribution is an Australian Government incentive to help people earning less than $60,400 per year (FY2024-25) grow their superannuation. If that's you, then for every $1.00 you pay into your super, the government will contribute up to 50¢, to a maximum of $500 per financial year. The amount the government co-contributes will depend on your income. 

Takeaways

• Claim a tax deduction on personal super contributions.
• Regular contributions to super can make a difference to your balance.
• Remember to check that your employer is paying your super correctly.  
• Understand how to grow super for retirement even early in your career.

If you’re unsure where to start with your super, we’re here to help – you can book a complimentary 15-minute chat with a super specialist at a time that suits you.

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This article is current at the date of publication and is subject to change. It contains general information only and does not take into account of your specific objectives, financial situation or needs or personal circumstances. You should seek personal advice or professional financial advice, consider your own circumstances and read our Product Disclosure Statement (PDS) before making a decision about Prime Super. For a PDS and Target Market Determination call 1800 675 839 or visit the primesuper.com.au/pds. Prime Super Pty Ltd ABN 81 067 241 016 AFSL 219723 RSE L0000277 is the (Trustee), of Prime Super ABN 60 562 335 823 RN 1000276.