If your gross income is less than $250,000 per annum, you’ll pay 15 per cent tax on your super contributions from your pre-tax earnings. If you earn more than $250,000, you'll be taxed 30 per cent.
Earnings made within super are taxed at a maximum of 15 per cent. If you’re receiving a pension through your super, those earnings are tax-free. If you had that same money outside your super, you would be taxed at your marginal tax rate. The key is not to exceed the annual caps.
There are several ways your super may be able to deliver tax benefits:
Government co-contribution
If you’re a low or middle income earner and make a personal after-tax contribution to your super fund, the government will contribute a maximum of $500 known as a co-contribution. The amount of government co-contribution depends on your income and how much you put in. You don’t need to apply for this – the ATO will determine if you’re eligible as long as your super fund has your TFN. The government co-contribution is tax-free.
Tax deductions
To claim a tax deduction, you need to file a “notice of intent” with your super fund and it needs to be acknowledged before you can claim it in your tax return. Contributing to a spouse’s super does not qualify for a tax deduction. By claiming personal contributions as a tax deduction, you reduce your overall taxable income and cut the amount of tax you pay.
Personal super contributions are amounts you contribute to your super fund that will count towards your non-concessional contribution cap unless you claim a tax deduction for them. If you claim a tax deduction, they become part of your concessional contributions. You can’t claim a tax deduction for your personal contributions AND be eligible for a super co-contribution.
Spouse contributions
If you contribute to your spouse’s super fund, you may be eligible for a spouse contribution tax offset of up to $540 if your spouse’s income is $37,000 or less.