read
Contribute to your super
Top up while you're earning, to enjoy more in retirement
Adding extra to your super while you're working can help boost your income when you retire. One way to top up your super is through voluntary super contributions.
What is a voluntary super contribution?
A voluntary super contribution is a payment you make into your own super, or that of your spouse. It can either be made in addition to your employer's contribution to your super or, if you're self-employed, it's made by you in place of an employer contribution.
How much can I contribute to super?
The amount you can contribute depends on a number of factors, including whether you're contributing before paying tax, such as from gross income, or afterwards, including savings. Personal super contributions made before your income tax are capped at $30,000 annually, including employer contributions. Using the 'carry forward rule', you might be able to use unused caps from previous years. However, payments to your super from income and savings you've already paid tax on can be up to $120,000 per year. Note that using the ‘bring forward rule’, you might be able to increase this up to $360,000.
How can I contribute to super?
There are lots of different ways to contribute to your own super, depending on your circumstances, financial preferences, and funds you have on hand. These include:
- salary sacrifice - a popular way to contribute, and involves some of your pre-tax income automatically going to top up your super on a regular basis
- contribute and claim - in which you pay directly to your super fund and claim a tax deduction
- after tax contributions - payments you make to your super from your taxed income, such as savings
- co-contribution - an Australian Government program that supports low-income earners by contributing 50¢ for every $1.00 they contribute to super
- spouse contribution - making a payment to top up your partner's super
- downsizer contribution - an initiative that allows those eligible to pay up to $300,000 from the sale of their home into their super fund.
Are super contributions tax deductible?
Some types of super contributions can reduce the amount of tax you have to pay. Salary Sacrifice is an arrangement with your employer, where they automatically transfer some of your regular wage to your super, and your PAYG tax is adjusted immediately.
'Contribute and claim' is a personal payment often used by self-employed people such as sole traders, but can also be used by employees to voluntarily pay extra into super and then claim a deduction at tax time.
These contributions are capped at $30,000 per year in total, however, using the 'carry forward rule', you might be able to use unused caps from previous years.
It's important to note that your employer calculates PAYG tax when calculating your take-home salary each pay cycle. You should see your PAYG tax amount drop. So, unlike 'contribute and claim' you don't make a separate claim for a deduction at tax time.
The third option is a spouse contribution. This involves you paying into your partner's super, and then potentially being able to claim up to $540 in tax offsets on the first $3,000 of your contribution, as long as you haven't already claimed a tax deduction on the contribution.