What are the tax benefits of contributing to superannuation?

Superannuation (super) in Australia offers a unique way to save for retirement while reaping significant tax benefits. By understanding these advantages, you can make informed decisions about contributing to your super and potentially lower your tax bill.

Concessional vs Non-concessional Contributions

There are two main types of super contributions: concessional and non-concessional.

  • Concessional contributions: These are made from your pre-tax income, reducing your taxable income and potentially lowering your tax liability. Examples include employer contributions mandated by the Superannuation Guarantee (SG) and salary sacrificed contributions (arranged with your employer).
  • Non-concessional contributions: These are made from your after-tax income and are not tax-deductible. However, they can still be beneficial for those approaching the concessional contributions cap.

Tax Benefits of Concessional Contributions

Concessional contributions offer several tax advantages:

  1. Lower Taxable Income: Since concessional contributions are deducted from your pre-tax income, your taxable income shrinks. This can push you into a lower tax bracket, resulting in a smaller tax bill.
  2. Tax-Favored Treatment within Super Funds: Money inside your super fund is taxed at a concessional rate of 15%, which is significantly lower than most marginal tax rates in Australia. This allows your super savings to grow faster due to the power of compounding.
  3. Tax Deductible for Self-Employed Individuals: Self-employed individuals can claim tax deductions for their personal concessional contributions, further reducing their tax burden.

Maximizing Your Concessional Contributions

There is a limit on how much you can contribute concessional super each year. This limit, known as the concessional contributions cap, is adjusted annually. For the 2023-24 financial year, the cap is $28,000 per person.

Here are some strategies to maximize your concessional contributions:

  • Salary Sacrifice: Discuss salary sacrificing with your employer. This allows you to divert a portion of your pre-tax salary directly into your super, reducing your taxable income further.
  • Spouse Contributions: If your spouse earns less than you, consider making spouse contributions. This allows you to contribute up to $3,000 per year into their super fund and claim a tax deduction, potentially benefiting from a lower tax bracket.

Non-Concessional Contributions and Tax Considerations

Non-concessional contributions do not offer immediate tax deductions. However, they can still be valuable for those nearing retirement or with limited concessional contribution space. There are also caps on non-concessional contributions, which vary based on your age and total super balance.

Important Considerations

While super offers significant tax benefits, it’s crucial to consider a few points:

  • Accessibility: Super funds generally restrict access to your savings until you reach your preservation age (typically between 55 and 67).
  • Investment Choice: You have some control over how your super is invested, but there may be limitations depending on your chosen super fund.
  • Tax Implications at Retirement: When you access your super in retirement, some or all of it may be taxed depending on your age and chosen withdrawal method.


Superannuation offers a powerful combination of retirement savings and tax advantages. By understanding the different types of contributions and their tax implications, you can develop a personalized super strategy to secure a comfortable retirement future. Remember, consulting with a financial advisor can be extremely helpful in navigating the complexities of superannuation and tailoring a plan to your specific circumstances.


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