Super contribution types
Super contribution types
Everyone’s in a different place when it comes to making additional super contributions. Good thing you have choices. And possible tax deductions on offer too. Let’s dive a little deeper.
Personal super contributions (after-tax)
Personal after-tax contributions are contributions you make to your own super from your take home pay i.e. after tax has been taken out. These super contributions are also known as non-concessional (meaning after-tax). You can make a one-off super contribution or set up a regular, ongoing payment through your employer or financial institution. How do you make a personal super contribution? Well, you’re spoilt for choice:
- BPAY®. View your personalised details on MemberOnline or contact us on 1300 360 149
- Payroll deduction (if your employer offers this option)
- Cheque. Complete the Contribution form, attach your cheque and send to CareSuper, Locked Bag 20019, Melbourne Vic 3001.
You may be able to claim a tax deduction for personal contributions
Personal super contributions are also tax deductible, as long as you meet the eligibility criteria (listed on the ATO website) and are under the super contribution limits. If you claim a tax deduction on a personal contribution, then the contribution is counted as a concessional (before-tax) contribution. It goes towards your concessional contribution cap and 15% contributions tax is deducted. However, there may be additional tax if you exceed your concessional contribution cap.
Make sure your super contributions are allocated by your super fund before the end of the financial year. (Super contributions are counted from when the payment is allocated by your super fund, not when the payment is sent.)
And remember to check the super contribution limits set by the government.
Salary sacrifice is an arrangement between you and your employer where you agree for them to pay part of your before-tax salary into your super. You nominate how much you want to contribute each pay cycle and your employer will usually pay this on top of the legislated 9.5%. The amount you salary sacrifice is deducted from your salary and paid into your super account before your income tax is calculated. That’s where the benefit lies.
This method reduces your taxable income and potentially reduces how much tax you pay. It’s a tax effective way to boost your super over the long-term. Instead of paying tax at your marginal rate, you’ll only pay up to 15% tax on your money as it goes into super (if you earn under $250,000 per year).
These super contributions are concessional (before-tax) contributions so they count towards your concessional contribution cap. There may be additional tax if you exceed your concessional contribution cap.
If you’re earning a lower income it can be tough to build your super. That’s where the Government’s co-contribution scheme could come in handy.
Established as an incentive to help lower-income earners save for retirement, the Government co-contribution works by providing eligible recipients with a boost of up to $500 to their super.
You might be eligible for a Government co-contribution if:
- You made an eligible personal super contribution to your account during the financial year
- Your total income is less than $54,837 for the 2020/21 financial year
- 10% of your income comes from employment or business-related activities, and
- You had a total super balance of less than $1.6 million (as at 30 June of the previous financial year).
And during the financial year you:
- Were under 71 years of age (at the end of the financial year)
- Didn’t hold a temporary visa
- Didn’t exceed your non-concessional contributions cap, and
- Lodged your tax return.
Your super fund will need to have your tax file number (TFN) and you’ll need to meet certain criteria. Once the criteria are met, the co-contribution will be paid directly into your super.
If you meet the criteria for a Government co-contribution, the contribution of up to $500 should go into your account automatically. You can see if you’ve received a co-contribution by logging into MemberOnline.
Some personal contributions aren’t eligible for Government co-contributions
Personal contributions claimed and allowed as an income tax deduction are not eligible for government co-contribution.
Low income super tax offset (LISTO)
LISTO is a way to make super fairer for low income earners and help ensure you don’t pay more tax on your super than on your take-home pay.
If your annual adjusted taxable income is $37,000 or less, you could qualify for a LISTO payment. The LISTO is a refund of contributions tax up to $500 and is paid directly into your super account.
To be eligible for the LISTO, you must also meet some other criteria:
- Your super contributions were paid to a complying super fund, like CareSuper, and were made by you or your employer. These contributions were concessional (before-tax) contributions.
- During the income year, you didn’t hold a temporary resident visa.
- Your super fund has your tax file number.
- You lodge a tax return and 10% or more of your total income comes from business and/or employment. If you can’t lodge a tax return, 10% or more of your income must come from employment.
Super opportunities for couples
Your super balance can be closely tied to your working pattern. And working part-time, taking time off to have and raise children, study, take a career break or recover from an illness can leave your super looking under-nourished. The super system offers a few ways for couples to build for the future together.
Spouse contributions are classed as non-concessional contributions and the same (non-concessional) rules apply. To make a contribution you need to complete the Spouse contribution advice form.
If your spouse has a low income or no income and you’re contributing to their super, you can claim a tax offset of up to $540. To be eligible:
- Both spouses must be Australian residents who were living together on a permanent basis when the contributions were made
- The contributions were made to a complying super fund (like CareSuper) during the same financial year as claiming the offset
- The contributions were not tax deductible
- The assessable income, total fringe benefits and employer super contributions for the receiving spouse were less than $40,000.
Your spouse’s total superannuation balance must be less than $1.6million.
Spouse contribution splitting
Spouse contribution splitting can be done once a year after the financial year. You’re effectively moving a portion of your employer super contributions to your partner’s super account. To request spouse contribution splitting you need to complete the Contribution splitting form.