While many of us receive regular superannuation guarantee (SG) contributions from our employer into our super account, making your own additional contributions now can save you tax and give your super balance an extra boost.
One way to do this is to make personal contributions and claim a tax deduction in your tax return. Eligibility conditions apply, including a work test for people aged between 67 and 74 years.
We recommend speaking to your financial adviser before making additional contributions to your superannuation.
Why make personal deductible contributions?
Personal deductible contributions are taxed at 15% in the super fund, instead of at your marginal tax rate.
Example – Tax treatment of a personal deductible contribution Marnie’s taxable income is $150,000. This means her marginal income tax rate is 37% plus 2% Medicare levy. If she makes a personal contribution of $10,000 and claims a tax deduction for the full amount, she’ll only be taxed $1,500 of contributions tax (15%) instead of $3,900 of personal income tax (39%). She’ll forgo $6,100 of after-tax money ($10,000 minus $3,900 personal income tax) but her super balance will be boosted by $8,500 (contribution net of contributions tax). |
Concessional contributions
Making personal deductible contributions is one way you can make concessional contributions.
Concessional contributions also include contributions your employer makes, for example, under the Superannuation Guarantee.
You can also make concessional contributions under salary sacrifice – an agreement between you and your employer for you to receive less income in return for extra superannuation contributions.
These contributions are called ‘concessional’ because they’re taxed in the super fund at 15% instead of being taxed at your marginal rate.
Low income earners (those with adjusted taxable income1 of $37,000 or less) may be eligible for a Low Income Superannuation Tax Offset which compensates them for this tax. High income earners (those with income2 plus concessional contributions of more than $250,000) may have to pay additional tax of up to 15% on their concessional contributions, known as Division 293 tax.
Concessional contributions cap
Contribution caps help to keep the superannuation tax arrangements affordable for the government. The concessional contributions cap is an annual limit on the total amount of concessional contributions that you can make. In the 2023/24 financial year, this cap is $27,500. In the 2024/25 financial year, the cap will increase to $30,000 in line with indexation rules.
Making extra concessional contributions – carry forward rule
If you haven’t been contributing up to the annual cap in the past five financial years, you may be able to make extra concessional contributions in the current or a future financial year. To be eligible for this special carry forward rule, your total superannuation balance3 must be less than $500,000 at 30 June of the previous financial year (ie 30 June 2023 for the 2023/24 financial year). To learn more about how the carry forward rule works, visit the ATO website or speak with your adviser. You can check your available carry forward concessional contribution amounts by logging into ATO online services through your myGov account.
How to make concessional contributions
You can make personal contributions into your Macquarie Wrap superannuation account via:
- BPAY®
- electronic funds transfer (EFT), or
- direct debit.
To read more about these options, you can visit Contributions and deposits on the Macquarie Help Centre.
More information
To learn more about personal deductible contributions, visit the ATO website or speak with your adviser.
Other ways of contributing
If you work as an employee, ask your employer how to put in place a salary sacrifice arrangement. This may benefit people who like the convenience of having regular contributions deducted from employment income before receiving it. If you haven’t already set up a salary sacrifice arrangement, putting one in place by 1 July means you’ll reap the benefits over the full upcoming financial year. To learn more about salary sacrifice, visit the ATO website or speak with your adviser.