Before-tax contributions

You can boost your super by making before-tax contributions to your account or asking your employer to redirect some of your before-tax salary into your super. The main benefits, include paying less tax and growing your retirement nest egg faster.

Before-tax contributions (also known as concessional contributions) are contributions made with your pre-tax income. They are taxed at a concessional rate, which may be lower than your marginal tax rate. Making additional before-tax contributions is a great way to boost your super, while paying less tax, so you can retire with more.

There are limits set by the Australian Government on how much you can contribute to your super. The before-tax (concessional) contribution cap is $30,000 per year. If the combined total of your employer and salary sacrificed contributions exceeds this cap, you could end up paying extra tax.

How to make before-tax contributions

Salary sacrifice

You can set up additional before-tax contributions that are deducted from your pay, known as salary sacrifice.

You will need to set up a salary sacrifice agreement with your employer. Make sure you clarify the terms to ensure your employer SG contributions are calculated on your full pre-tax income and that salary sacrifice will not impact entitlements as listed below in the Things to consider section.

If your employer doesn't offer salary sacrifice, you can make additional contributions from your take-home pay. If you claim these after-tax contributions as a tax deduction, they can also be converted into concessional contributions.

High income earners

If your annual income, including before-tax contributions made to super, exceeds $250,000 then additional tax of 15% (called Division 293 tax) will apply to some, or all, of your before-tax contributions.

The ATO will calculate any tax you are required to pay and will send you an assessment notice with instructions on how to pay.

You can choose to pay this tax by releasing money from your super, or you can pay it directly to the ATO using your own money.

Visit ato.gov.au for more information about Division 293 tax.

Employer contributions

Most before-tax contributions are made by your employer on your behalf. These may be paid at:

• The minimum legislated rate, known as the Superannuation Guarantee (SG)
• The minimum rate set by an industrial award or agreement
• A higher rate set by your employer

Super stapling

From 1 November 2021, your existing active super account will be ‘stapled’ to you and follow you when you move from job to job.

When you start a new job, your employer may need to request your stapled super fund details from the ATO. Your employer will still offer you a choice of super fund.

Head to the Super stapling explained page for more information.

Catch-up contributions

If your total superannuation balance is below $500,000 (on 30 June of the previous financial year) you may be able to take advantage of the 'carry forward' rule.

So how does it work?

Each financial year you can make before-tax (concessional) contributions up to your cap, which is currently $30,000. If you don't make before-tax contributions to your cap, you can carry forward this unused amount on a rolling basis for five years.

Effectively you're 'catching up' on the full amount you could have contributed in previous years.

Usually, any additional contributions above your cap are taxed at a higher rate, but catch-up contributions will be taxed at the concessional 15% in your super account.

For more information on the carry forward rule, visit the ATO website.

Low Income Super Tax Offset

The Low Income Super Tax Offset (LISTO) is a government payment that is designed to offset the 15% tax low income earners have paid on their superannuation contributions (including employer contributions).

If you’re eligible and earn $37,000 or less, the Government automatically refunds any tax you’ve paid on before-tax contributions up to $500.

When you lodge your tax return the ATO will work out your eligibility and pay the LISTO directly into your super account.

Please ensure you have provided Media Super your Tax File Number or you will not receive the payment.