How to use your Superannuation contributions as a tax saving strategy

Building your superannuation while your working is key in ensuring a healthy source of income come retirement. But, did you know, implementing voluntary superannuation contributions has excellent tax benefits and you can take advantage of it right now?

In most instances, money invested into super fund  is taxed at a lower rate than your personal income tax rate. At tax time, you should capitalise on this and better understand how you can save tax with voluntary super contributions.

There are several ways you can get tax benefits from super contributions.

How “Concessional” Super Contributions are Taxed

Concessional (before tax) super contributions include employer super contributions made on your behalf, any salary sacrifice contributions you make, or any personal contributions that you claim a tax deduction on in your tax return. These contributions are taxed at 15% when they are received by your super fund (up to a limit of $25,000 per year), provided you earn less than $250,000 annually.

Personal super contributions are especially useful for people who are on higher marginal tax rates or if their employer refuses to set up a salary sacrifice arrangement.

The people who would benefit the most are those who earn above $45,000 per year, as this is where the marginal tax rate plus Medicare Levy rises to 34.5%. Claiming a tax deduction on super contributions effectively makes your tax rate only 15%. That is a big tax saving!

Catch Up Super Contributions

From 1 July 2018, people can make “carry-forward” concessional super contributions if they have a total superannuation balance of less than $500,000. People can access their unused concessional contributions caps on a rolling basis for five years. Amounts carried forward that have not been used after five years will expire.


If you are a low-income earner (earning up to $37,000 per year), the low-income superannuation tax offset ensures that you do not pay a higher rate of tax on your super contributions than your income tax rate. The offset will be paid directly to your super account and the payment will be equal to 15% of your concessional contributions for the year, capped at a maximum of $500.

Individuals who earn between $39,837 and $54,837 during the 2022 financial year may also be eligible for super co-contributions from the government of 50 cents for each dollar, up to a maximum of $1,000 in non-concessional (after tax) contributions.


If you earn more than $250,000 a year (including super), your concessional contributions are taxed at an additional 15%, bringing the total tax on these contributions to 30%. However, this is still less than your marginal income tax rate of 47%. This extra 15% is known as Division 293 tax. Only the concessional contributions which make your total income exceed $250,000 are subject to the additional tax.

If your concessional contributions exceed the concessional contributions cap of $25,000 per year, the excess is included in your tax return and taxed at your marginal tax rate (less an allowance for the 15% already withheld by your super fund). You can choose to withdraw some of the excess contributions to pay the additional tax.

Overall, capitalising on your super contributions come tax time is a great strategy to lower your potential debt. You will need to check a few finer details with our team, to ensure we do not exceed your super caps, plus the timing of your contributions is crucial to get right to entitle you to a tax deduction for them in the upcoming financial year. 

If you are ready to save come tax time then schedule a tax planning meeting with our team today >>  book here

The sooner the Growth iQ team can get started on implementing tax saving strategies, the sooner we can help you save tax before 30 June. 

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