In this guide
We all love making a profit on our investments, but no one enjoys the tax liability that comes with a windfall.
The good news is that making a super contribution could reduce your tax bill and give your retirement savings a welcome boost at the same time.
How capital gains are taxed
When you sell an asset for more than you paid for it, the profit is called a capital gain. If the asset was held for longer than 12 months, discount rules mean that only 50% of the gain needs to be declared on your tax return.
Taxable capital gains are added to your income and taxed along with the rest of your earnings at normal marginal income tax rates.
We often call this Capital Gains Tax (CGT), even though it is not a separate tax.
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Reducing CGT with personal deductible contributions
Making a tax-deductible super contribution reduces your taxable income and can assist to minimise the impact of tax on capital gains if you contribute to super in the same financial year that you make a capital gain.
It is important to remember that deductible contributions to super are taxed at the rate of 15%, or 30% if your income plus low-tax super contributions is above $250,000 for the year (Division 293 tax). To make a saving, the tax rate you pay on super contributions must be below the rate of income tax you would otherwise pay on the capital gain.
If you’re at least 18 and have not yet turned 67, you can make personal deductible contributions.
If you will be under 18 on 30 June at the end of the financial year, deductible contributions are permitted during the year if you earn income as an employee or business operator.
If you’re aged 67 or more on the day of your contribution, you can claim a deduction if you meet the work test in that financial year and you contributed either before your 75th birthday or within 28 days after the end of the month you turned 75.
Personal deductible contributions are counted towards your concessional contribution cap. If you contribute more than the cap (currently $32,500 per financial year), the excess amount will be taxed at your marginal rate, so only deductible contributions that are under your cap can save you tax.
If your total super balance was below $500,000 last 30 June, you may have unused concessional cap space from prior years that allows you to contribute more than the standard annual cap.
The table below compares the outcome for Renata if she contributes $75,000 to super and claims a tax deduction versus making no super contribution*.
| No voluntary super contribution | Personal deductible contribution | |
|---|---|---|
| Salary | $90,000 | $90,000 |
| Taxable capital gain | $75,000 | $75,000 |
| Tax free capital gain | $75,000 | $75,000 |
| Deductible super contribution | $0 | $75,000 |
| Taxable income | $165,000 | $90,000 |
| Income tax (inc. Medicare) | $45,030 | $19,000 |
| Employer super contribution | $10,800 | $10,800 |
| Super contribution tax | $1,620 | $12,870 |
| Net super contribution | $9,180 | $72,930 |
| After-tax income | $194,970 | $146,000 |
| Net super + net income | $204,150 | $218,930 |
*2026–27 tax rates, including automatic $1,000 deduction. No other tax deductions are accounted for.
After taxes, Renata is $14,780 better off if she makes a $75,000 deductible contribution to super.
Renata can make this contribution without exceeding the contribution cap thanks to her eligibility for the carry forward of previously unused cap space. Her total concessional contribution in 2026–27 will be $85,800, made up of her $75,000 deductible contribution and her employer’s $10,800 super guarantee contribution.
What’s the catch?
Although a super contribution could reduce your tax bill when you have incurred a capital gain, it does mean your money is locked up in super until you retire after your preservation age or meet another condition of release.
It is important to consider whether this is a trade-off you’re willing to accept or if your money could be better used for other goals outside super, even if it means paying extra tax.
There are of course other ways to manage capital gains including offsetting with capital losses, so it is important to seek financial advice for your personal circumstances.
The ATO also has anti-avoidance provisions for income tax, so you need to ensure that you’re not only pursuing this (or any) strategy purely to minimise tax. Generally, the other purpose of making a super contribution is to save for retirement, and in this case anti-avoidance shouldn’t be a problem. However, if you were to make a contribution and quickly withdraw it again – perhaps you’re over 65 or have met another condition to access your super – the ATO may make a case that the contribution was purely to avoid tax. Significant penalties apply for this.
The bottom line
Making deductible contributions to super can help to reduce tax on capital gains in the right circumstances.
If you’re using this strategy, it is important to keep an eye on your concessional contribution cap and remember that contributions are invested for your retirement.
Keep in mind that it doesn’t have to be all or nothing – part of your taxable gain could be contributed to super, and the rest used for something else, particularly if you don’t have space under your cap to contribute the whole amount.
If you’re a small business owner, there are other capital gains concessions that can apply when you sell your business.
Common questions about super contributions and capital gains
Using super contributions to reduce tax on a capital gain raises plenty of questions, so we’ve answered some common ones from SuperGuide members below.
Q: I have a capital gain from selling a property this year. Can I make a contribution to super to reduce the tax I pay on it?
A: Yes, if you are eligible to make a personal tax-deductible contribution, or you can accommodate a large contribution by salary sacrificing to super from your wages. Both are concessional contributions.
A concessional super contribution reduces your taxable income and therefore your income tax, including tax on capital gains. Tax will be levied on the super contribution at the rate of 15%. If this is lower than the tax that would otherwise be payable, your tax liability will be reduced.
Note that any capital gain that accrues after 30 June 2027 is generally subject to a minimum 30% tax rate. Claiming a tax deduction for super contributions can still reduce your tax under the new regime, provided your remaining taxable income is at least $45,000 plus the post 30 June 2027 taxable gain. This ensures the minimum tax rate of 30% applied to the gain is not more than you would otherwise pay. The $45,000 figure relates to the current level of the 30% tax bracket and may change in future.
Non-concessional (after-tax) contributions don’t reduce tax on a capital gain, because you don’t claim a tax deduction for them.
Remember to be mindful of your concessional contributions cap and whether you can use carry-forward to contribute more than the standard annual concessional cap.
This strategy to reduce tax that would otherwise apply when you have a capital gain can be used for any taxable capital gain (for example on shares, property, or managed funds).
Q: Does my tax-deductible contribution have to be made in the same financial year as the capital gain? Which date counts if I sign a contract in one year and settle in the next, and when do I lodge my notice of intent?
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Q: I’m selling an investment property. How can putting money into super as a concessional contribution reduce the tax on my capital gain, and can I use carry-forward to contribute more?
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Q: My spouse and I are going to sell an investment property and want to put the money into super. I have some unused concessional contributions I can access and my spouse does not. We can both use the bring-forward rule as our balances are below the threshold. What is the tax treatment of these personal contributions, and will they reduce our capital gains tax?
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Members can read every answer on our guides, plus access member-only webinars, calculators and tools.
Q: I’m eligible for the small business 15-year CGT exemption, but I already have more than the transfer balance cap in super. Can I still contribute the exempt amount to super?
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