All you need to know about superannuation contribution

Superannuation is the money set aside for you to access after your retirement. The mandatory requirement of employer superannuation contribution in Australia has put everyone in the position of needing to manage their superannuation. But do you know there are various kinds of contributions apart from employer contribution? Let’s find out about them…

Mandatory employer contributions, known as the Superannuation Guarantee (SG), is currently set at 9.5% of your gross pay. It is the most common example of concessional contributions.

A “Concessional contribution” is the money deposited into a superannuation account on a pre-tax basis. It will then be taxed at a rate of 15% and hence is a tax-effective way to accumulate wealth over time.

BUT, Concessional contributions are generally capped at $25,000 per financial year. If you want to contribute more than $25,000 in a particular year, you can do so by carrying forward unused amounts, subject to certain conditions.

Apart from Superannuation Guarantee, Salary sacrifice is also a common tool used by high-income employees. Salary sacrifice is an arrangement between an individual and his/her employer to contribute a portion of the pre-tax income directly into a superannuation account. It can effectively reduce an individual's assessable income, and therefore their income tax expenses.

Individuals can also make ‘after-tax’ contributions, known as the “Non-concessional contribution”. It is money deposited by individuals to their superannuation account on a post-tax basis and, therefore, no further tax payment is required after the contribution is made.

Similar to the concessional contribution, non-concessional contributions are also capped at $100,000 per financial year. Again, you can ‘Bring Forward’ your contributions upon satisfying certain conditions.

We will explain a variety of tax benefits and other benefits under the legislation for superannuation scheme in the next blog ~ Please FOLLOW us to ensure you don’t miss out.