Making the most of your super contributions

Superannuation is a vital but often underused part of Australia’s retirement system. To encourage people to make the most of their super, there are significant tax advantages compared to investing outside super.

Understanding the different types of super contributions — and how to take advantage of them — can make a significant difference to your retirement savings.

1. Concessional Contributions

Concessional contributions are made from pre-tax income and are taxed at a concessional rate of 15% when they go into the fund. The most common types include:

• Employer Contributions (Super Guarantee): Employers must contribute at least 12% of an employee’s salary into their super. This is mandatory and forms the base of most people’s super balances.
• Salary Sacrifice: Employees can ask their employer to pay part of their pre-tax salary into super. This reduces their taxable income and is a tax-effective way to boost super.
• Personal Deductible Contributions: Individuals, including the self-employed, can make personal contributions from after-tax income and claim a tax deduction. These are treated the same as salary sacrifice contributions.

There is a cap of $30,000 (2025/26) for concessional contributions. However, if your total super balance is under $500,000, you may be able to also use the unused concessional contributions for the last five years.

2. Non-Concessional Contributions

Non-concessional contributions can’t be claimed as a tax deduction and are not taxed when put into super. These include:

• Voluntary Contributions: Anyone can contribute extra funds into their super from their savings or after-tax earnings.
• Spouse Contributions: You can contribute to your spouse’s super account and may receive a tax offset of up to $540 if your spouse earns less than $40,000 per year.

The annual cap for non-concessional contributions is $120,000 (2025/26), or up to $360,000 over three years using the “bring-forward” rule if your total super balance is under $1.9 million.

3. Government Co-Contributions

If you earn less than $60,400 (2024/25) and make a non-concessional contribution of up to $1,000, the government may contribute up to $500 into your super. This is a great way for low- and middle-income earners to boost their savings with help from the government.

4. Downsizer Contributions

Australians aged 55 or older can contribute up to $300,000 ($600,000 for a couple) from the proceeds of selling their main residence, without it counting towards their non-concessional cap. This is particularly useful for those looking to top up their super later in life.

5. First Home Saver Scheme (FHSSS)

Under the FHSS scheme, individuals can make voluntary contributions of up to $15,000 per year (and up to $50,000 total) to be later withdrawn and used to buy a first home. These can include both concessional and non-concessional contributions.

Making the most of super contributions

• Plan ahead: Understand your annual caps to avoid excess contribution penalties.
• Take advantage of Government incentives: If eligible, the co-contribution scheme and spouse contributions offer small but valuable tax benefits.
• Review regularly: Track your total super balance, especially if you’re nearing cap thresholds.
• Seek professional advice: A financial advisor can help tailor a contribution strategy and ensure you are in the right investments based on your income, goals, and retirement timeline.

We specialise in helping professionals and executives grow and protect their wealth and make the most of their super. If you would like to discuss how you could benefit from independent financial advice, book a chat via the button below or contact us on 02 6269 3339 or at team@constructwealth.com.au.