Why Additional Super Contributions Benefit You At Tax Time

May 27th 2023 | Categories: Tax |

Making Additional Super Contributions

The end of the financial year marks the start of tax time but before then it’s beneficial to assess your super contributions in order to maximise your tax benefit and grow your super balance. We encourage you to make any additional super contributions before June 10 to ensure your payment is received in time and your superannuation balance is adjusted before the June 30 cut-off. Below we discuss the various types of superannuation contributions that you can make as well as strategies to help boost your return.  

Why Make Additional Super Contributions?

Your employer must pay 10% of your pay towards superannuation however you may wish to make additional contributions on top of this. The benefit of making additional contributions is twofold. Firstly, there are savings you can make on tax, as super contributions are taxed at 15% compared to your personal tax rate. Secondly, the more you invest and the earlier you invest, the more you will have for your retirement. The tax benefits offered for contributions made to your superannuation fund are capped. The super contributions up to $27,500 per financial year are taxed at 15%, while any contribution above the limit attracts additional tax. If you have some extra savings you want to invest for your retirement, you earn more than $57,016 and have less than $1.7M in your super fund, then extra contributions may be something you want to consider.  

Pre-Tax and After-Tax Super Contributions

In addition to the mandatory employer contributions to your super fund, you can also make extra super contributions. If you earn more than $57,016 per financial year, it could be beneficial to make extra contributions to your super account to save for retirement and obtain tax benefits.  

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Strategies to Grow Your Super Contributions

Superannuation funds and super contributions form a strong foundation for life after retirement. If your super contributions are well managed, you can not only save taxes but also save more for your retirement. The following strategies can be used effectively to manage your super contributions and grow your investment balance.  

It is essential to assess your super balance, super contributions, and strategies before the end of the financial year to avoid last-minute stress and maximise your tax benefit. An adviser can work with you to implement the best super contribution strategy for you. They can also review your super balance, check the insurance cover, assess your financial situation and ensure you are on the right path to retiring comfortably.  

Want to make additional contributions? Speak with a Financial Adviser as soon as possible to ensure the paperwork can be processed in time.

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What you need to knowThis information is provided by Invest Blue Pty Ltd. (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice regarding those matters and seek personal financial, tax and/or legal advice before acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you.