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Working out how best to grow your super nest egg can be confusing and selecting the right mix of concessional and non-concessional contributions makes things even tougher.
To help guide the process, SuperGuide has created some case studies for typical Aussies of different ages, income levels and work situations in 2021–22. The case studies show how using different super contributions can make a significant difference to your take-home pay, super balance – and possibly your tax bill.
From 1 July 2021 there have been significant changes to the annual caps for making super contributions. The rate for compulsory Super Guarantee (SG) contributions paid by your employer has also changed (rising to 10%), so that makes it a good time to check your current contribution mix to ensure you are making the best choice for your current financial situation.
How do I work out my best mix of super contributions?
Fortunately, there are some nifty tools around to help point you in the right direction when it comes to making super contributions.
One of the best is available on the Australian Securities and Investment Commission’s (ASIC) MoneySmart website – and best of all, it’s free. (It’s also the tool we used to work out our case studies.)
To use ASIC’s Super Contributions Optimiser, simply enter the necessary information about your age, income and super contributions. The calculator assumes your employer contributes an amount equal to 10% of your ordinary times earnings (OTE) into your super account, but if your employer contributes more than the required SG minimum, simply increase the percentage amount.
The calculator is regularly updated to reflect the annual taxation rates applying to your salary in the current financial year.
If you are self-employed, reduce your amount of employer contributions to 0% and enter your contributions amounts as additional voluntary or personal contributions.
The purpose of the ASIC calculator is to show the combination of super contributions giving you the biggest increase in your super for a given reduction in your take-home pay in the current financial year.
Unfortunately, the contribution calculator does not work for members of defined benefit super funds, as these use fund-specific formulas to work out the super benefits for their members.
What types of super contributions can I make?
Before checking out the ASIC calculator, here’s a quick overview of the main types of super contributions, plus some links to SuperGuide articles explaining things in more detail if you want to refresh your memory:
1. Concessional (before-tax) contributions
These contributions are made from your income before you pay income tax.
There is a 15% contributions tax payable on these contributions when they are added to your super account and the total amount of your concessional contributions must not exceed the annual general cap or limit ($27,500 in 2021–22).
The main types of concessional contributions are:
- Your employer’s Super Guarantee (SG) contributions
- Award and additional employer contributions
- Salary-sacrifice contributions
- Personal contributions for which you claim a tax deduction.
2. Non-concessional (after-tax) contributions
These super contributions are made from your income after you pay income tax.
There is no 15% contributions tax payable on these contributions as you have already paid tax on the money. Your total contributions must not exceed the annual general non-concessional contributions cap ($110,000 in 2021–22).
The main types of non-concessional contributions are:
- Personal contributions from your tax-home pay
- Spouse contributions
3. Government contributions into your super account
These contributions are made by the government directly into your super account if you meet the eligibility criteria and they can provide a useful boost to your retirement savings (see following case studies):
- Co-contributions
- Low income super tax offset (LISTO)
Case studies: How to mix and match your super contributions
The following case studies show how using a variety of super contributions can substantially boost the amount in your super account.
Obviously, using a different mix of contributions or a higher/lower contribution amount from your salary will give different results. In many cases, making certain types of super contributions (such as using a salary-sacrifice arrangement) can also lower your annual tax bill.
Pay for Min ($ per year)
With super contributions | No super contributions | |
---|---|---|
Gross salary | $27,000 | $27,000 |
Less salary sacrifice | -$3,774 | $0 |
Less income tax + Medicare levy | -$0 | -$1,094 |
Take-home pay | $23,226 | $25,906 |
Less after-tax super contributions | -$2,521 | $0 |
Net pay | $20,706 | $25,906 |
Min’s super ($ per year)
With super contributions | No super contributions | |
---|---|---|
Employer contributions | $2,700 | $2,700 |
Before-tax contributions (salary sacrifice) | $3,774 | $0 |
After-tax contributions | $2,521 | $0 |
Government co-contribution | $500 | $0 |
Low income super contribution | $500 | $405 |
Less contributions tax | -$971 | -$405 |
Net contributions | $9,023 | $2,700 |
Source: Author using ASIC Super Contributions Optimiser calculator
Pay for Jason and Leigh-Anne ($ per year)
With super contributions | No super contributions | |||
---|---|---|---|---|
Jason | Leigh-Anne | Combined | Combined | |
Gross salary | $72,000 | $35,000 | $107,000 | $107,000 |
Less salary sacrifice | -$11,313 | $0 | -$11,313 | $0 |
Less income tax + Medicare levy | $10,235 | $2,937 | $13,172 | $17,164 |
Take-home pay | $50,453 | $32,063 | $82,516 | $89,836 |
Less after-tax contributions | $0 | -$1,000 | -$1,000 | $0 |
Net pay | $50,453 | $31,063 | $81,516 | $89,836 |
Jason and Leigh-Anne’s super ($ per year)
With super contributions | No super contributions | |||
---|---|---|---|---|
Jason | Leigh-Anne | Combined | Combined | |
Employer contributions | $7,200 | $3,500 | $10,700 | $10,700 |
Before-tax contributions (salary sacrifice) | $11,313 | $0 | $11,313 | $0 |
After-tax contributions | $0 | $1,000 | $1,000 | $0 |
Government co-contribution | $0 | $500 | $500 | $0 |
Low income super contribution | $0 | $500 | $500 | $500 |
Less contributions tax | -$2,777 | -$525 | -$3,302 | -$1,605 |
Net contributions | $15,736 | $4,975 | $20,711 | $9,595 |
Source: Author using ASIC Super Contributions Optimiser calculator
Pay for Nasir ($ per year)
With super contributions | No super contributions | |
---|---|---|
Gross salary | $192,000 | $192,000 |
Less salary sacrifice | -$8,300 | $0 |
Less income tax + Medicare levy | -$57,006 | -$60,907 |
Take-home pay | $126,694 | $131,093 |
Less after-tax contributions | -$75,601 | $0 |
Net pay | $51,093 | $131,093 |
Nasir’s super ($ per year)
With super contributions | No super contributions | |
---|---|---|
Employer contributions | $19,200 | $19,200 |
Before-tax contributions (salary sacrifice) | $8,300 | $0 |
After-tax contributions | $75,601 | $0 |
Government co-contribution | $0 | $0 |
Low income super contribution | $0 | $0 |
Less contributions tax | -$4,125 | -$2,880 |
Net contributions | $98,976 | $16,320 |
Source: Author using ASIC Super Contributions Optimiser calculator
Pay for Robert and Carlene ($ per year)
With super contributions | No super contributions | |||
---|---|---|---|---|
Robert | Carlene | Combined | Combined | |
Gross salary | $65,000 | $25,000 | $90,000 | $90,000 |
Less salary sacrifice | -$20,000 | -$1,774 | $21,774 | $0 |
Less income tax + Medicare levy | -$4,812 | $0 | $4,812 | $12,301 |
Take-home pay | $40,188 | $23,226 | $63,414 | $77,699 |
Less after-tax contributions | -$0 | -$1,000 | -$1,000 | $0 |
Net pay | $40,188 | $22,226 | $62,414 | $77,699 |
Robert and Carlene’s super ($ per year)
With super contributions | No super contributions | |||
---|---|---|---|---|
Robert | Carlene | Combined | Combined | |
Employer contributions | $6,500 | $2,500 | $9,000 | $9,000 |
Before-tax (salary sacrifice) contributions | $20,000 | $1,774 | $21,774 | $0 |
After-tax contributions | $0 | $1,000 | $1,000 | $0 |
Government co-contribution | $0 | $500 | $500 | $0 |
Low income super contribution | $0 | $500 | $500 | $375 |
Less contributions tax | -$3,975 | -$641 | -$4,616 | -$1,350 |
Net contributions | $22,525 | $5,633 | $28,158 | $8,025 |
Source: Author using ASIC Super Contributions Optimiser calculator
Pay for Arjun and Prisha ($ per year)
With super contributions | No super contributions | |||
---|---|---|---|---|
Arjun | Prisha | Combined | Combined | |
Gross salary | $78,000 | $13,000 | $91,000 | $91,000 |
Less salary sacrifice | -$19,700 | $0 | -$19,700 | $0 |
Less income tax + Medicare levy | -$9,375 | $0 | -$9,375 | $16,297 |
Take-home pay | $48,925 | $13,000 | $61,925 | $74,703 |
Less after-tax contributions | -$24,222 | -$1,000 | -$25,222 | $0 |
Net pay | $24,703 | $12,000 | $36,703 | $74,703 |
Arjun and Prisha’s super ($ per year)
With super contributions | No super contributions | |||
---|---|---|---|---|
Arjun | Prisha | Combined | Combined | |
Employer contributions | $7,800 | $1,300 | $9,100 | $9,100 |
Before-tax contributions (salary sacrifice) | $19,700 | $0 | $19,700 | $0 |
After-tax contributions | $24,222 | $1,000 | $25,222 | $0 |
Government co-contribution | $0 | $500 | $500 | $0 |
Low income super contribution | $0 | $195 | $195 | $195 |
Less contributions tax | -$4,125 | -$195 | -$4,320 | -$1,365 |
Net contributions | $47,597 | $2,800 | $50,397 | $7,930 |
Source: Author using ASIC Super Contributions Optimiser calculator