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Tax Saving Strategies- Personal Super Contribution

In the bustle of today’s world, however, making plans for a comfortable retirement demands a proactive attitude regarding your finances. Employer superannuation contributions (super) are a good part of your retirement savings, but personal superannuation contributions increase your savings significantly and provide you with greater financial security in your later years. This blog will cover the pros and cons of making voluntary contributions to your superannuation fund personally and the strategies that can be employed. 

What are personal contributions and pre-tax super contributions?

Personal superannuation contributions also called voluntary contributions, are the amount of your income that you contribute to your superannuation fund from your after-tax income. Contrary to employer contributions which are mandatory and usually from pre-tax income, personal contributions are made voluntarily and may be able to be claimed as a tax deduction under certain conditions of contributing to your superannuation fund yourself.

How does the personal superannuation contribution deduction work on my tax return?

Making concessional contributions tax-effective: Personal super contributions can be tax-effective when claimed as concessional contributions. Here’s the breakdown.

  1. Lowering Taxable Income: When you give concessional contributions, the amount of contributions you give is subtracted from your assessable income before the tax is calculated. On the other hand, this will in turn cut down your taxable income, and most probably, you will be in a lower tax bracket, meaning that you will pay less tax.
  2. Tax Treatment Within the Super Fund: The tax rate of 15% is applied to the contributions that you make to the super fund. Normally, this is a lower rate than your marginal rate of tax (the rate you usually pay on your income).

Steps to Claim the deduction on Your Tax Return:

  1. Notice of Intent: To claim a tax deduction for personal super contributions, you must notify your super fund by submitting a “Notice of Intent to Claim Personal Super Contributions in tax deduction. This form must be lodged with your super fund before withdrawing your super benefit or making specific account adjustments.

  2. Acknowledgement: Once your super fund receives your Notice of Intent, they will process it and send you an acknowledgment. This acknowledgment serves as proof of your tax return.

  3. Tax Return Claim: During tax time, include the total amount of your concessional contributions and the acknowledgment from your super fund in your tax return. This allows the Australian Taxation Office (ATO) to recognize the deduction.

Benefits of Personal Contributions to Super:


  1.  Tax Efficiency: Super contributions which come under the concessional category and are taxed at a concession rate of 15 per cent is a big tax advantage over the marginal tax rate of most individual taxpayers. This tax-advantaged position is a result of deducting super from tax so that maximum retirement savings are built up over time. Whether we contribute to our super personally and if yes, at what rate, needs to be considered in the light of the tax implications.

  2. Boost Retirement Savings: While topping up your superannuation account is an effective method of having more funds at retirement age, and therefore improving your life and financial independence, it should not be done without extra precaution.
  1. Salary Sacrifice Opportunities: Such a scheme can be implemented through a salary sacrifice plan where part of the gross salary is extracted from tax and provided to a super fund to help reduce the taxable income that would in turn lead to an increase in net income.


FAQs about Personal Super Contributions/Concessional Super Contributions:

Q: What is the maximum amount that I can put into my superannuation fund as a personal concessional contribution?

A: The cap of the concessional contributions is expected to be reviewed and the current cap is set at $27,500 (for the 2021-2022 financial year). This limit comprises both the employer’s contributions and the employee’s concessional contributions.

Q: Can I deduct my super contributions from my tax payments?

A: Yes, tax deductions for personal super contributions made into a super fund will be allowed for people who are eligible to do so. To be able to claim a deduction, you must meet some requirements, such as a valid Notice of intent to claim a Deduction form being submitted to your super fund.

Q: What does tax deduction mean in Australia after being taxed?

A: Income tax deductions in Australian superannuation are the process of making contributions into a superannuation fund from the after-tax income. These contributions, more specifically the non-concessional contributions (taxed upon withdrawal), are not taxed again when put into the fund because the tax has already been paid on the income used to contribute. 

Q: Does super help to get rid of taxable income?

A: Certainly, super contributions, when made in Australia, lower one’s taxable income. Concessional contributions, those which are made by employer contributions and salary sacrifice contributions, are taxed at a lower rate and therefore people pay lower taxes when these contributions go into their super fund.

Q: Can an individual super contribution be made by age?

A: Likewise, the biggest proportion of people from the age category of 18 to 67 can opt for making personal superannuation contributions. In the case of an individual who has attained the age of 67 to 74 years, the work test has to be passed by her or him (doing 30 days’ work in a financial year in which total work days have to be 40 days) for becoming eligible to contribute.

Q: In case I have exhausted the concessional limit of the cap and it is the only kind of contribution that can be made to my super fund, will the extra amount be taxed or forfeited?

A: Changing the taxation system may require you to pay more tax if you earn income beyond the concessional contributions cap. The ratio of the concessional contributions limits many people from the upper-income bracket from getting the maximum benefits of the superannuation tax concessions. In case you pass the threshold level, you will be taxed on the part that exceeds the amount, at your marginal tax rate. In addition, there will be an accruing of interest for your loan.

Q: Can I access my superannuation that was put aside before the time I retired from my job?

A: Generally, you can keep your benefits of concessional super contributions until you satisfy the requirement of release. This can happen when you are 65 years old or you have reached the preservation age, and decide to retire. But in some other cases, the ATO standards must be obeyed by the Australian Taxation Office (ATO).

Q: What are post-tax deductions in Australia?

A: Post-tax deductions in Australia are expenses or contributions deducted from your income after taxes have been taken out. Examples include voluntary superannuation contributions and certain insurance premiums. They can help reduce taxable income and lower tax liability.

Q: Does taxable income include super?

A: Yes, taxable income in Australia generally includes employer superannuation contributions, but voluntary individual contributions may have different tax treatment depending on whether they are concessional or non-concessional.

Q: Do you pay tax on superannuation?

A: Yes, superannuation contributions are generally subject to tax in Australia, but the tax treatment varies depending on factors like whether the contribution is made by an employer or individual, and whether it’s concessional or non-concessional.

Q: Are personal super contributions tax deductible?

A: Yes, personal super contributions made by individuals are generally tax-deductible in Australia, subject to certain conditions and limits. These contributions are known as concessional contributions, and individuals can claim them as a tax deduction when they lodge their tax returns. However, it’s important to ensure that you meet the eligibility criteria and follow the proper procedures for claiming the deduction.

Q: How can sole traders in Australia claim a tax deduction for contributing to their super?

A: As a sole trader in Australia, you can contribute to your super and claim a tax deduction for it. Fill out a form, submit it to your super fund, and include the deduction in your tax return. Keep records and stay within contribution limits.

Q: Are superannuation contributions of the voluntary kind tax deductible in Australia?

A: Indeed, voluntary superannuation contributions that employees make in Australia are tax-deductible, but there are certain conditions that they have to meet. This also includes the contributions made by personal service providers and sole traders.

Q: What does reportable superannuation contribution mean?

A: In Australia, reportable superannuation contributions are made by your employer for salary sacrifice payments and any personal contributions you claim as a tax deduction.


If you have any questions about maximizing your financial well-being, please feel free to contact one of our Tax Advisor / Tax Agent / Tax Accountant at 0893860047. Let’s shape your success together!