If you’re employed, your employer should be paying a percentage of your earnings into your super account.
It’s worth checking to make sure you’re being paid the right amount.
If you can afford it, making extra contributions is a great way to boost your retirement savings. And it can reduce your tax. If you’re on a low income, you may be eligible for extra contributions from the government.
Check you’re getting the right amount of super
In most cases, you’re eligible to receive super from your employer if you:
earn $450 or more in a month
are aged 18 or over
Even if you have a casual job, your employer must pay you super.
If you’re under 18, you must work more than 30 hours a week.
See employees on the Australian Taxation Office (ATO) website for more information about eligibility.
How much super your employer must pay
Your employer must pay at least 9.5% of your ‘ordinary time earnings’ into your super account.
This minimum payment is called the super guarantee.
Ordinary time earnings are what you earn for your ordinary hours of work. See checklist: salary or wages and ordinary time earnings on the ATO website.
Work out how much super your employer should be paying into your super account.
Check how much super you’re getting
To see how much super your employer is paying you, check your:
super account — online or by calling your fund
Employers only have to transfer super into your super account once a quarter (every three months). Some choose to pay more often. Ask your employer how often they pay yours.
If your employer is not paying your super
If you’re not getting the right amount, talk to your employer.
If your employer isn’t paying your super, report them to the ATO. See unpaid super from your employer on the ATO website.
Grow your super with extra contributions
You can grow your super by making extra payments yourself. Even small amounts add up over time, and voluntary contributions can reduce the amount of tax you pay.
If you’re on a low income, you may be eligible for extra contributions from the government.
Pre-tax super contributions: salary sacrifice
You can ask your employer to pay part of your pre-tax pay into your super account. This is known as a salary sacrifice or salary packaging.
The payments, called concessional contributions, are taxed at 15%. For most people, this will be lower than their marginal tax rate. You benefit because you pay less tax while you boost your retirement savings.
Generally, making extra concessional contributions is tax effective if you earn more than $37,000 per year.
There’s a limit to how much extra you can contribute. The combined total of your employer and salary sacrificed contributions must not be more than $25,000 per financial year.
If you’re self-employed, concessional contributions are tax deductible. See super for self-employed people.
Make after-tax super contributions
You can also make contributions to your super from your after-tax pay.
These payments are called non-concessional contributions because you have already paid tax on the money. You can make up to $100,000 in non-concessional contributions each financial year.
See non-concessional contributions on the ATO website for more information.
Grow your super with extra contributions. Work out whether to make extra contributions before or after tax, or a mix of both.
Low income super tax offset
If you earn $37,000 or less, you may be eligible for a low income superannuation tax offset (LISTO) of up to $500 per year.
You don’t need to do anything. The ATO will work out your eligibility and pay the money into your super account.
See low income super tax offset on the ATO website.
If you earn less than $52,697 per year (before tax) and make after-tax super contributions, you may be eligible for a matching contribution from the government, called a co-contribution. The government will work out how much you are entitled to when you lodge your tax return. If you’re eligible, the government will pay the co-contribution directly to your fund. See super co-contribution on the ATO website.
Downsize your home and put money into super
If you’ve owned your home for more than 10 years and you sell it, you may be able to contribute up to $300,000 from the sale to your super.
You must be age 65 or older and meet the eligibility requirements. See downsizing contributions into superannuation on the ATO website.
You can split your employer super contributions with your spouse. Contact your fund or see contributions splitting on the ATO website for more information.
If your spouse earns a low or no income, you may be able to claim a tax offset if you contribute to their super fund. See tax offset for super contributions on behalf of your spouse on the ATO website.
Cara boosts her super by salary sacrificing
Cara earns $90,000 before tax, excluding her employer’s super contribution. If she decides to redirect $10,000 of her pay into salary sacrifice super contributions, she will save $3,450 in tax, with the extra money going into her super fund.
Without salary sacrifice
With salary sacrifice
Less salary sacrifice to super
Less tax and Medicare levy
Take home (net) pay
Employer super contribution
Plus salary sacrifice
Less contributions tax
Net super contribution
Assumptions: The figures used in this table are estimates only and are based on 2018—19 income tax rates. They include the low and middle income tax offset and a Medicare levy of 2%. Employer super contributions remain the same after salary sacrifice.
In this scenario, Cara’s take home pay will drop by $6,550. Cara will save $1,950 in tax on income and super, and have an extra $8,500 in her super.
For more information, call us on (08) 8362 4555.
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/grow-your-super/super-contributions
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