How Topping Up Your Super Can Help Reduce Your Tax Bill…
One of the best ways to grow your super balance is by making additional concessional (pre-tax) contributions while you're still in the workforce.
Thanks to the power of compound interest, even small extra contributions to your super can make a significant difference by the time you retire.
Importantly, making concessional contributions — either through salary sacrifice or eligible personal contributions — can also help you reduce your tax bill. Here’s how it works:
The Potential Tax Benefits You Could Be Missing Out On
Imagine you're an employee earning $90,000 annually (excluding employer super contributions) with no additional investment income.
If you redirected $5,000 of your salary into super through salary sacrifice, you would save about $1,600 in income tax over the financial year.
Although your take-home (net) pay would drop by $3,400, your super balance would grow by $4,250 after accounting for contributions tax. In effect, your combined financial position — net pay plus super — would increase by $850.
Don’t Want to Salary Sacrifice? You Can Make a Lump Sum Contribution Before June 30
If your employer doesn’t offer salary sacrifice, you can still boost your super and enjoy the same tax benefits by making a personal contribution before June 30 and claiming a tax deduction.
What to Know About the Concessional Contributions Cap
This financial year, you can contribute up to $30,000 to your super at a concessional 15% tax rate — including your employer’s mandatory contributions.
If your total super balance is under $500,000, you can carry forward any unused cap amounts from the past five financial years, potentially allowing you to contribute even more without penalty.
You can monitor your concessional contributions via the ATO’s online service in myGov (Super > Information > Concessional Contributions) or check your contributions in Vanguard Online under Account Activity.
Important: If you exceed the cap, excess contributions are taxed at your marginal rate (with a 15% offset) and may incur an additional excess contributions charge.
Why Your Age Matters When Topping Up Your Super
There are age-related rules around super contributions and claiming tax deductions:
Ages 67–74: You must meet the work test or qualify for a work test exemption.
Over 75: Your fund can only accept compulsory employer contributions and personal contributions made within 28 days after the end of the month you turn 75.
For full eligibility details, visit the ATO’s website.
Rick Maggi, Financial Advisor Perth, Westmount Financial
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Disclaimer
This document has been carefully prepared by Westmount Securities Pty Ltd (ABN 42 090 595 289, AFSL 225715) for general information purposes only. However, neither Westmount Securities Pty Ltd nor any of its affiliates guarantee the accuracy or completeness of any statements contained herein, including any forecasts. It is important to note that past performance is not a reliable indicator of future outcomes. This material does not consider the specific objectives, financial circumstances, or needs of any particular investor. Therefore, before making any investment decisions, investors should assess the relevance of this information to their individual situation and consult professional advice, taking into account their unique objectives, financial position, and needs.