For many people, compulsory super won’t be enough to fund a comfortable retirement. Contributing a little extra can make a surprisingly big difference to your savings – it all adds up.
How to contribute extra
There are two ways to contribute extra to your super – salary sacrifice and after tax contributions. Which one will work best for you depends on your income. Salary sacrifice can reduce the tax you pay, but generally works better if your income is higher. If you have a lower income, after tax contributions may be more effective for you as the government’s co-contribution scheme could reward you with up to $500 of extra super when you invest $1,000*. In some cases, you may be better off with a combination.
Ready to start now?
To get started with regular contributions give this request form to your payroll officer or HR department who will make the arrangements for you. (Not all employers offer salary sacrifice, so please check with them to see whether it’s available.)
If you want to make regular after tax contributions without going through your employer, you can set up a regular BPAY payment through your own internet banking. Click here for instructions
Why contribute extra?
Compulsory super may not be enough for a comfortable retirement. Our retirement calculator can help you work out how much you might need and how much you need to save to reach that goal.
Please note: contribution caps apply to the amount of after tax and before tax contributions you can make each year to your super.
*Conditions apply - please refer to the ATO website for more information.
What is salary sacrifice?
It’s an arrangement where your employer makes contributions into your super before tax on your salary is deducted. This reduces your income for tax purposes, so you may pay less tax.
Why would I salary sacrifice?
Advantage 1 Money you salary sacrifice into your super is taxed at 15%, compared with savings outside your super, which are subject to your marginal tax rate of up to 47% (including Medicare levy).
From July 2017, if you have an annual income of over $250,000, you will incure an additional 15% tax (i.e 30% tax) on the lesser of the excess over $250,000 and your concessional contributions.
Advantage 2 You could have a lower tax bill if you salary sacrifice, as you will pay your marginal tax rate on less of your income. You should reassess your contributions regularly, as your income may go up or down and tax thresholds may change. There are also a number of tax and contribution cap factors to take into account.
After tax contributions
After tax contributions
Supersize your super with the government co-contribution (2020/21)
If you earn $39,837 or less (before tax) and you invest $1,000 in after tax contributions in to your super, the government co-contribution scheme will put in an extra $500 for you. The $500 co-contribution reduces on a sliding scale until it cuts out altogether when you earn $54,837 or more (before tax).
How do I make a contribution?
The easiest ways to make a contribution are:
- By BPAY.
You can set up a regular BPAY payment through your own internet banking, or make a one-off contribution. Click here for instructions.
- By cheque. Click here for the form you need to send with your cheque.
Need more info?
The fine print
The fine print
You may be eligible for the government co-contribution payment if you:
- Earn a total assesable annual income of less that $54,837 for 2020/21 (including reportable fringe benefits)
- Make non-concessional (after-tax) contributions into a complying super fund and do not claim a tax deduction for it
- Lodge an income tax return for the year of income
- Are under 71 years of age at the end of the year of income
- Do not hold a temporary resident visa
- 10% or more of your total income comes from eligible employment related activities, carrying on a business or a combination of both
- You must have a total superannuation balance less than the general transfer balance cap for that year ($1.6m for 2020/21), and
- The contribution you made does not exceed your non-concessional contribution cap for that year.
If you are eligible, your co-contribution amount will be automatically calculated and deposited into your super account. You cannot receive a co-contribution if we do not have your TFN.
While the co-contributions are treated as non-concessional contributions, they do not count towards your non-concessional contributions cap.