How your super can help you save on tax

Boosting your super can be one of the most important things you can do for your future self. The good news is, there are ways to do this that can be tax effective. Read on to explore just a few of these below. 

One potentially tax-effective way to help boost your super is by deciding to salary sacrifice. This is where you give up a part of your salary and tell your employer to pay it into your super account instead. 

These additional super contributions will generally be taxed in your super fund at a rate of 15%. Whereas if you were to receive this money as pay, your marginal tax rate would apply. This can be as high as 45% for some people.¹  

If you do set up a salary sacrifice arrangement it won’t reduce the amount of super you’re entitled to each year. Your employer must still pay 11% on top of your salary or wages into your nominated super fund. This is what’s known as the government’s Superannuation Guarantee (SG).² Find out more about how super works.  

Personal super contributions are money you pay into your fund from your after-tax income or savings. Since you’ve already paid tax at your marginal rate on this money, it won’t be taxed further when received by your super fund.³

If you're eligible to claim a tax deduction for making personal super contributions, that changes the way these contributions are taxed by the super fund. They get treated as if they came from your pre-tax income instead.³ These contributions will generally be taxed at 15% going into the fund. You save on tax because you’re paying 15% rather than being taxed at your marginal tax rate.

Read our fact sheet on claiming a deduction with Hostplus.

If you’re a low or middle-income earner you might be eligible for a government co-contribution. Make a personal after-tax super contribution and you could receive a co-contribution of up to $500. The ATO will pay it automatically if you’re eligible and if your super fund has your tax file number. 

The ATO doesn’t include this payment in your taxable income. It won’t be subject to tax when it’s paid to your super fund either.⁴  However, earnings on the co-contribution will be taxed like any other earnings of the super fund. 

You might be able to claim a tax deduction of up to $540 if you top up your spouse’s super account by at least $3,000 and their income is below $40,000.⁵

For every dollar of spouse contributions you make, you can claim 18% of the contribution as a tax offset – up to a maximum offset of $540 a year. However if your spouse earns more than $37,000, the $540 offset amount gradually reduces and reaches zero when your spouse’s total assessable income is $40,000.⁶

Adding even a small amount to your spouse’s account each year could help you secure the retirement you both want. Find out more about making a spouse contribution.

Download the fact sheet