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Superannuation, or ‘super’, is a way to save money for your future. It is important to understand how much you are contributing to your super and how much you can contribute.

Types of Super Contributions

Super contributions fall into two categories: concessional contributions and non-concessional contributions.

Concessional Contributions: These are made into your super fund before tax. They include compulsory Super Guarantee (SG) contributions made by your employer, salary sacrifice contributions made out of your before-tax income, and personal super contributions that you claim as a tax deduction. Concessional contributions are generally taxed at 15% in your super fund, or 30% if your total income exceeds $250,000.

Non-Concessional Contributions: These are made into your super fund from after-tax income. They include personal contributions that you can’t claim a tax deduction for1. Some people may choose to make non-concessional contributions when they’ve reached their yearly concessional contribution cap, following an inheritance or sale of a large asset, or to receive a government co-contribution.

Super Contribution Caps

There are limits on the amount of concessional and non-concessional contributions you can make each year.

Concessional Contributions: The cap is $27,500 per financial year for all ages. However, you can carry forward unused cap amounts accrued since 2 July 2018 if your total super balance was less than $500,000 on 30 June of the previous financial year.

Non-Concessional Contributions: If you’re under 75, the cap is $110,000 per year. Alternatively, you can contribute up to three years of annual caps ($330,000) under bring-forward rules if you’re eligible. The amount you can make as a non-concessional contribution depends on your total super balance as at 30 June of the previous financial year.

Changes in the 2024/25 Financial Year

The concessional and non-concessional contributions caps will be increasing effective from 1 July 2024:

• The concessional contribution cap will increase from $27,500 to $30,000.
• The non-concessional contribution cap will increase from $110,000 to $120,000.

Other Rules Regarding Super Caps

If you exceed super contribution caps, additional tax and penalties may apply. If you have super assets of $1.9 million or more as at 30 June of the previous financial year, you can’t make additional non-concessional contributions to your super, or you may be penalised. There are restrictions on the ability to trigger bring-forward rules where you have a large total superannuation balance (more than $1.68 million in 2023-24).

Potential Super Benefits

There are several benefits to making super contributions:

• Tax Deductions on Super Contributions: You can claim a tax deduction on voluntary super contributions you make. You’ll need to tell your super fund by filling out a notice of intent and have the lodgement acknowledged by your fund before you file a tax return for the year you made the contributions.
• Co-contributions from the Government: If you’re a low to middle-income earner and have made a voluntary (non-concessional) contribution to your super fund, you might be eligible for a government co-contribution of up to $500.
• The Low-Income Super Tax Offset: If you earn $37,000 or less annually and your employer makes super contributions on your behalf, the government may refund the tax that was paid on those contributions back into your super account, up to a maximum of $500 per year.
• The Spouse Contributions Tax Offset: If you’re earning more than your partner and would like to top up their retirement savings, or vice versa, you may want to think about making spouse contributions.

• Downsizer Contributions: People aged 55 or over can make a voluntary contribution to their super of up to $300,000 using the proceeds from the sale of their home (if it’s their main residence) – regardless of their work status, super balance, or contributions history.

Remember, the value of your investment in super can go up and down. Before making extra contributions, make sure you understand, and are comfortable with, any potential risks. The government sets general rules about when you can access your super. Typically, you won’t be able to access your super until you reach preservation age and meet a condition of release, such as retirement.

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