How to grow your super but avoid paying extra tax

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 2024-25, your employer is required by law to pay 11.5% of your ordinary time earnings (OTE) salary² into your super fund.

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 2024-25 is $30,000. This covers your employer contributions and any other before-tax contributions you make.

The voluntary after-tax contributions cap for 2024-25 is $120,000. 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 2024, your cap is nil.

But you may be able to contribute more than $30,000 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, 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. 

Here’s how it works: 

If $15,000 in before-tax contributions goes into your super in 2024-25, the $15,000 unused portion of your cap can effectively be added to your concessional cap for 2025-26. So, you would be able to receive up to $45,000 in before-tax contributions in that financial year.³

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.