How to use the Moneysmart Super contributions optimiser

Part of ASIC’s role in financial services is to promote confident and informed participation by investors and consumers in the financial system, and the Moneysmart website is a major part of those efforts. The site contains a range of educational materials including how to spot scams, assess risks and find qualified help. It also provides a variety of financial calculators that can assist you to make decisions.

The Super Contributions Optimiser is a powerful tool available on Moneysmart that can help you choose the best mix of super contributions for your personal situation. The calculator estimates the value of any co-contribution you may be eligible for in return for making after-tax contributions and the tax advantage of salary sacrifice (or personal deductible contributions) to suggest whether you should make before tax (concessional), after-tax (non-concessional) contributions, or a combination of both.

One of the most valuable features of the tool is its ability to model the position of a couple as a unit. This means that the calculator will estimate the mix of contributions you and your partner should each make to achieve the best overall tax saving and government co-contribution (if any). Results are based on the amount you as a couple can afford to save. This often means one partner contributing more than the other because available tax savings depend on your marginal tax rate.

If you’re concerned about building up one partner’s super balance at the expense of the other, keep in mind that spouse contribution splitting allows you to transfer contributions from your partner’s account to yours, or vice-versa, once per financial year. This can help you to ensure that benefits are shared fairly.

Learn more about spouse contributions and splitting

Please be aware that while the calculator provides quite reliable output, it does have limitations. One of these is that it doesn’t offer the ability to consider any additional concessional contributions you are eligible to make above the standard annual cap by using the carry-forward measure. Instead, total concessional contributions are limited to the annual cap amount. Make sure you read the assumptions and disclaimers for the tool to understand more about how it works.

The contributions optimiser is fairly simple to use, but there are a few tricks to it, so we have created a short video to help you understand how to make the most of it. We hope you find it useful.

Hi, I’m Kate from SuperGuide, and I’m going to show you how to use the Moneysmart Super Contributions Optimiser.

This calculator allows you to estimate the most suitable way for you to make contributions to your super. That might be before tax, it might be after tax, or it could be a combination of both. The tool is taking into account the government’s co-contribution scheme and also any tax advantage you would get by making before-tax contributions to your super, also known as salary sacrifice, or if you’re self-employed, a personal tax-deductible contribution.

I’d like to take you through two examples. First, for a single person, and then for a couple to help you make the most of this tool.

The first step is to scroll down and insert your personal details. For this example, I’m going to use someone aged 45 with an income of $45,000 per year. You can also use this drop-down box to change the frequency. So if you’re paid fortnightly or monthly and you’d prefer to put in your fortnightly or monthly income, you can do so that way. Do remember, though, that you need to insert your pre-tax income, not the amount that you get in your bank account. So make sure you’re checking your payslip for the gross figure.

The second step is to put in your employer contribution amount. Now you can see here, the calculator has already put in 11% by default, and that’s because that’s the minimum that your employer is required to contribute for you if you’re an employee. If you’re lucky enough that your employer contributes more than the minimum amount, you can change that here. Alternatively, if you’re self-employed and not receiving any contributions from an employer, you would change the figure to zero.

Next, we need to choose relationship status. In this example, I’m going to leave it as Single. The last thing we need to do before the calculator will give us results is let it know how much you have available that you’d like to contribute to super. In this case, I’m going to put in $2,000 per year that this person feels they can afford.

And you can see immediately, the calculator has generated results. In this particular example, it’s suggesting that this person could make both before-tax and after-tax contributions to get the biggest boost to their super balance. To see the details of this suggestion, we need to click this down arrow in the show details box.

Once you do that, you can see the output from the calculator is quite comprehensive. It’s showing you the comparison of making super contributions with not making any contributions at all. First of all, we can see here the net pay. The original net pay without contributions is just over $39,000, and with contributions, just over $37,000. The difference is that $2,000 that we told the calculator was affordable to contribute.

If you scroll down further again, you can see the impact on superannuation, both with and without those contributions. All the figures are laid out there for you. Most importantly is this bottom row, which shows you the difference that that’s going to make to your super if you choose to make the contributions that the calculator has suggested.

You can also see here the real reason that the calculator is suggesting this person make after-tax contributions. Here are the after-tax contributions, and here is the government co-contribution. Because this person earns below the maximum co-contribution threshold, they can receive that $448 co-contribution from the government in return for these after-tax contributions. Once that maximum co-contribution has been received based on the person’s income, the calculator is suggesting they make the remainder of their contributions by salary sacrifice or before tax, and that’s to generate an income tax saving.

What I’d like to do now is show you the difference if you put in a Couple. So we’ll go back to the top of this Calculator tool and change the relationship status to Couple. You can see when we do that, some new boxes pop up immediately within the tool to put in the partner’s details. I’m going to use someone who, again, is 45 but has a higher income, around $120,000 per year.

Again, we need to put in how much the couple together this time can afford to contribute to super. I’ll put in $6,000. Now, again, you can see that the results are immediately generated. In this particular example, the calculator is now suggesting that the first individual not make any before-tax contributions, but still make that $896 per year as an after-tax contribution to receive their co-contribution from the government.

Their partner, who’s the higher earner, is being recommended to do the salary sacrificing. Now, the main reason for that is that the higher income that person has means they’re in a higher tax bracket and they’ll save more tax by making super contributions before tax than their lower income earning partner would. So you can see that the tool is taking into account the holistic situation for the couple as to who is going to get the most benefit by making which type of super contribution.

Again, the details are shown in the next section. There are more columns this time because it’s showing both you and your partner, and then the combined situation. Again, the important figures are at the bottom. We can see here in the combined net pay that the difference between the two figures is the $6,000 we said that we could afford. Last of all, in the super comparison, we can see how much additional money overall the couple will have going into super if they take the action that’s being suggested by the calculator.

Of course, there’s a lot of information here. If you want to take this away and look at it later, the tool does allow you to print your results. You would just go up to the edge of your browser and select Print, and you can see there that you’d be able to print out the results and look at them later on whenever you would like to.

Last of all, I do want to draw your attention to the assumptions of this calculator and the disclaimers. So you can click these arrows at the bottom to see the relevant disclaimers and also the assumptions that the calculator is using.

One thing that’s important is that this calculator is adjusting your contributions so that you don’t exceed the concessional contribution cap. Now that’s great, but also you may be entitled to a higher than usual concessional contribution cap if you’re eligible to use the carry forward measure. That applies if your superannuation balance is $500,000 or less on 30th June. If that’s you, you may actually be able to contribute more than $27,500, and the calculator won’t take that into account. But that’s a small restriction, really, for a calculator that’s free and quite simple to use.

I hope that that’s helped you to understand how this calculator works and what you can use it for to get the most out of your super.