Adding to your super now can make a substantial difference to how much you’ll have later. But how you add to your super can make a difference too. So take some time to consider the best option for your situation.
1. Salary sacrifice
One effective way to add to your super is to ask your employer if they will allow you to invest a percentage of your before tax salary. To find out more, download the Salary Sacrifice Guide.
2. Personal contributions
Another way is to make after tax payments to your super. Download our Extra Contributions Brochure and Contribution Slip Booklet to get started.
The difference between salary sacrifice and personal contributions
With salary sacrifice you pay 15% tax on your contribution when it’s deposited into your super because it comes from your before tax salary, which means it’s not taxed at your personal tax rate but at the fund’s tax rate. Salary sacrifice also lowers your taxable income, so you might end up paying less tax.
If you make a personal or voluntary contribution there is no tax payable on your contribution, as it has already been taxed at your marginal tax rate – which will be more than 15% – from your net (after tax) salary.
Salary sacrifice contribution limits
Salary sacrifice contributions count towards your before tax (concessional) contributions cap of $25,000 p.a.* A transitional amount of $50,000 p.a. is allowed for members age 50 and over, for five years until 2012.
*2009–10 figures
Personal contribution limits
Personal contributions count towards your after tax (non-concessional) contributions cap of $150,000 p.a.* If you’re under 65, you can bring forward two years of contributions and make a larger contribution of $450,000 over three years. If you’re 63 or 64, you can bring forward two years of contributions and contribute up to $450,000 without satisfying the work test# in the following two years. If you’re between 65 and 74, your cap is $150,000* as long as you satisfy the work test# each year.
*2008–09 figures
#You must be in gainful employment for 40 hours within a 30 consecutive day period in the financial year you wish to make a contribution.