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Superannuation Finance
18 March 2024 5 min read
If you’re like many Australians and aren’t sure you’ll have enough money set aside for your retirement, here are some ways to give your super a boost.
As many as 55% of Australians aren’t sure they’ll have enough money when they retire.1 But there are tax-effective ways to grow your super to help you to retire well with confidence.
How to contribute to your super (and pay less tax)
Your employer pays a compulsory amount to your super, known as Superannuation Guarantee (SG) contributions. For 2023-24, your employer is required by law to pay 11% of your ordinary time earnings (OTE) salary2 into your super fund (this will increase to 11.5% on 1 July 2024).
As well as the employer SG contributions, you can choose to make extra contributions to help grow your super. Making these contributions may even help you pay less tax.
- You can make before-tax contributions, where contributions come out of your pay before income tax, such as salary sacrifice. You pay 15% tax on this money when it goes into your super (or 30% if your income plus super contributions is more than $250,000 per year.) This compares to your normal tax rate, which can be up to 45% + 2% Medicare Levy).
- You can make voluntary after-tax contributions, where you put money in that you’ve already paid tax on such as money from your bank account. As you’ve already paid tax on this money, no more tax is deducted when it goes into your super.
Super is designed to be a tax-effective way to save for your retirement. But there are limits, or contribution caps, on how much extra you can put into your super. Keep in mind you generally can’t access your super until you reach age and 60 retire.
How much you can add to super before you hit a contribution cap
The before-tax contributions cap for 2023-24 is $27,500. This covers your employer contributions and any other before-tax contributions you make.
The voluntary after-tax contributions cap for 2023-24 is $110,000. If eligible, you can also bring forward the cap for 1 or 2 future years. If your total super balance was equal to or more than $1.9 million at 30 June 2023, your cap is nil.
But you may be able to contribute more than $27,500 in before-tax contributions in a financial year if you did not contribute up to the full amount in previous years, depending on your total super balance.
This is called the carry-forward of unused concessional contributions.
The before-tax contribution carry-forward rule
If your total super balance is less than $500,000 at 30 June, you can carry forward any unused before-tax contributions from 2018-19 over a rolling 5-year period.
This means if you don’t use the full amount of your before-tax contribution cap ($27,500 in 2023-24), you can carry forward the unused portion and take advantage of it up to 5 years later.
Carry forward amounts expire after 5 years if you haven't used them. So, if you don’t use a 2018-19 unused cap amount before the end of 2023-24, it will expire.
Here’s how it works:
If $10,000 in before-tax contributions goes into your super in 2023-24, the $17,500 unused portion of your cap can effectively be added to your concessional cap for 2024-25. So, you would be able to receive up to $45,000 in before-tax contributions in that financial year.
Check on any unused contributions with the Australian Taxation Office (ATO) using your myGov account.
Queensland Government employees
If you are a Queensland Government employee, your super contribution arrangement changes from 1 July 2023 might mean you are receiving more super, which makes it worth checking on your contribution caps and how it might affect your tax.
Case study: Dani’s storyShow content
Dani is 35, works for the Queensland Government earning $120,000 per annum and has $212,000 in super.
In 2022-23 Dani received $15,300 in SG into her super account as a Queensland Government employee receiving 12.75% in employer contributions.
Dani also contributed 5%, or $6,000, as before-tax contributions into super.
That’s $15,300 in employer contributions and $6,000 in before-tax personal contributions, which makes a total of $21,300.
As the 2022-23 concessional contributions cap was $27,500, Dani has $6,200 to carry forward in 2023-24.
If Dani adds that carry forward amount of $6,200 from 2022-23 to the 2023-24 cap of $27,500, Dani can contribute up to $33,700 in 2023-24.
This case study is provided for illustrative and educational purposes only and the members shown are not real. Additionally, figures may be rounded for ease of understanding. Members should seek advice from a qualified licensed professional regarding their own circ*mstances.
We’re here to help
Phone Advice3 – Call 1300 360 750 for simple over-the-phone advice about your account. Or you can learn more here.
Log onto Member Online to check your contributions for the financial year.
1. Australian Retirement Trust Financial Wellbeing Index 2023: survey of 1000 Australians. Survey carried out by Ipsos on behalf of ART, September-November 2023.
2. A person's OTE is generally what an employer pays them for their ordinary hours of work, including commissions, shift loadings, and allowances, but not overtime payments. If you're not sure whether a payment type is OTE, you can ask your employer.
3. Employees in the Australian Retirement Trust group provide advice to members and employers as representatives of QInvest Limited (ABN 35 063 511 580, AFSL 238274) that is wholly owned by the Trustee as an asset of Australian Retirement Trust. QInvest Limited is a separate legal entity responsible for the financial services it provides. Eligibility conditions apply. Refer to the Financial Services Guide at qsuper.qld.gov.au/guides for more information.
