When you know the super contribution limits and rates – and the different ways to add money to your super – you can boost your annual tax refund and save painlessly for your retirement.
A healthy superannuation fund is an important part of planning for your retirement. Putting extra money into your superannuation is a great investment in your future. Once it becomes a habit, it is a pretty painless for most people. However, if you do it wrong, you could face costly rates that erase the tax advantage of your super contributions.
Check the super contribution limits to ensure you contribute correctly because if you go over the limits, it can be costly and waste your savings.
Salary Sacrifice to your superannuation fund
An easy way to leverage superannuation contributions is through salary sacrifice. This is extra money you request to go directly from your employer into your super fund. That money is subtracted from your taxable income, reducing the tax you pay each year. However, there is a limit on the amount of additional money you can put into your superannuation fund each year. This is called the ‘concessional contributions cap.’
Concessional super contributions caps and rates
The concessional contributions cap is the amount of money you can contribute to your super account at the concessional tax rate of 15%, which is a nice low rate of tax.
From July 2024, you can contribute up to $30,000 per year into your superannuation at the concessional rate, including:
- employer contributions (including contributions made under a salary sacrifice arrangement)
- personal contributions claimed as a tax deduction.
It’s important to understand that these payments will be taxed at 15%.
Carry-forward concessional contributions
Since July 2018, you can carry forward any unused concessional contributions cap, for up to 5 years, to increases your cap the following years, as long as your superannuation balance is less than $500,000.
Example:
In 2024-25 Abby’s superannuation balance was $400,000 and her employer had made a total of $10,000 in contributions to her superannuation fund at the end of the financial year.
Of her $30,000 yearly cap she has $20,000 left. Abby is able to carry forward that $20,000 to the 2025-26 financial year, giving her a cap of $30,000 + $20,000 = $50,000 for 2025-26.
Note: It’s possible to carry forward unused cap amounts for a maximum of five years only. You cannot carry forward unused cap amounts from longer than five years ago, as they will have expired.
Non-Concessional Super Contributions Rate (after-tax contributions)
An alternative to salary sacrifice is non-concessional contributions: contributions, paid into your super from your own personal pay or savings, after tax.
- These non-concessional contributions are subject to a yearly cap of $120,000.
- Be careful: Pay over the limit and the maximum marginal tax rate is levied on the excess contributions left in the super fund.
Super Co-Contributions can really help boost your Super savings
This is great opportunity for low and middle-income earners to get a much needed leg up with their super.
In the 2024-25 financial year, if your total income is $45,400 or less and you pay extra into your super (after tax) the government will pay 50c for every $1 you pay you pay into your Super, up to a maximum of $500.
Co-contributions are paid for extra payments into Super up to a maximum income of $58,445. Therefore, once you earn above this amount, you can no longer receive the extra cash.
| Year | Max entitlement | Lower income threshold | Higher income threshold |
|---|---|---|---|
| 2024-25 | $500 | $45,400 | $60,400 |
| 2023–24 | $500 | $43,445 | $58,445 |
| 2022–23 | $500 | $42,016 | $57,016 |
| 2021–22 | $500 | $41,112 | $56,112 |
If you can financially afford to do so, contribute to your superannuation on a regular basis as it can have a positive long term impact. If you’re still unsure, talk to one of our accountants about the tax benefits of contributing.
