Tax effective contributions to maximise your super

Make additional contributions

It may be tempting to spend the money today but additional contributions to your superannuation makes a whole lot of difference to your final balance. Even small amounts contributed on a regular basis.

You can make tax-effective contributions to grow your superannuation. You can reduce the effective tax you pay, because contributions into your super are taxed at 15 per cent versus the same amount being taxed at your individual marginal rate of tax.

You can make the contributions by:

• salary sacrifice contributions
• concessional personal contributions - this is where you claim a tax deduction on your individual income tax return for the personal contributions

These contributions are called 'concessional' contributions. They also include the superannuation guarantee (SG), which is currently 9.5%. Some employer may pay a higher amount.

There are caps on concessional contributions that you can make each financial year. The cap is counted by the super fund on a received basis, not when the payment is made. For example, a contribution made by electronic funds transfer on 29 June 2018 that is received in the SMSF's bank account on 1 July 2018 will count towards the 2018-19 financial year cap.

For the concessional contributions cap, see Rates and thresholds.

Worked example: a person with gross earnings of $70,000
A comparison to making personal concessional contributions of $18,000.

¹ based on tax rate applying in the 2018-19 year, includings Medicare levy, offset and rebates.

Worked example: a person with gross earnings of $115,000
A comparison to making personal concessional contributions of $15,000.

² based on tax rate applying in the 2018-19 year, includings Medicare levy, offset and rebates.

Do you need help with your situation or if you wish to discuss the above, please contact us. Our contact details.