How to save income tax and boost your super at the same time

You may have heard about how contributing a little more to super, can pay off big time in the long-term. But did you know it can also deliver short-term tax benefits?  

Your superannuation account is there to make sure you’ll have money to live on when you stop working. By law, your employer puts 9.5% of your salary into your super fund. This ‘Super Guarantee’ is a great start, but to really maximise your savings it can be a good idea to make additional contributions to your super. 

And the good news is your contributions do not need to be large. Any additional contributions you make to super can really boost your savings over the long-term. That’s because they benefit from the power of ‘compounding’ – which can basically be explained as earning returns on returns. 

But boosting your super isn’t the only advantage, because when you make extra contributions to super you can also benefit by saving on the amount of tax you pay. 

What’s ‘salary sacrifice’ and how can it help you save tax?

Salary sacrifice involves giving up some of your pay and putting it into super instead. It could be as little as the equivalent of a cup of coffee a day, or a couple of movie tickets each month. Over time that little ‘sacrifice’ could result in a big payoff. In addition to this, for many people it can deliver a short-term tax benefit as well. 

Here’s how it works. The portion of your before-tax salary that you ‘sacrifice’ to grow your super gets taxed at the special rate of 15% (so long as you stay within the limits). If you earn more than $37,000 a year, that could make it a tax-effective way for you to save. That’s because you’re on the higher marginal tax rate of 32.5c for every $1 you earn over $37,000*. By salary sacrificing into super, you can save tax and boost your super at the same time, because instead of paying 32.5c in every dollar you earn, you are paying 15 cents in super. 

How to arrange ‘salary sacrifice’ 

You’ll need to talk to your employer and fill out a Voluntary contribution by payroll deduction form. Alternatively you can email your employer a pre-populated email available from the How to contribute page. Remember to confirm with your employer that the salary sacrifice amount does not affect the amount of Super Guarantee they contribute on your behalf. 

Making ‘after-tax contributions’ to super 

Not all employers offer the option of salary sacrifice. But don’t worry – there is another option. You can also make extra contributions to your super after you’ve been paid. You can set up regular transfers from your account to your super fund each fortnight or month. Or make one-off contributions when it suits you. Either way, you simply make a payment directly into your super fund via BPAY. 

To get your tax benefit, you need to complete a Notice of intent to claim a tax deduction form and send it to your fund within the required timeframe.  You will also need to receive an acknowledgment from your fund before you lodge your return for the relevant year. 

The tax savings are much the same as salary sacrifice, it’s just you get the tax back after you file your Tax Return, instead of up front. The ATO will give you a rebate for the difference between your PAYG marginal tax rate and the 15% tax that applies to super contributions. 

Remember your limits 

There’s a strict limit of $25,000 that you can put into super each year at the concessional 15% tax rate. That includes all Super Guarantee contributions from your employer and any extra contributions you make by salary sacrifice. After-tax contributions that you later claim as a deduction will also be counted as a concessional contribution and will be included in the limit. 

It’s easy to start super saving today 

On the GuildSuper website you’ll find a range of calculators that let you compare how different levels and types of extra super contributions could work for you. Or if you’d like to speak with someone, call GuildSuper Helpline on 1300 361 477 (8am–7pm AEST, Monday to Friday) and they’ll be happy to help. 


* ATO Thresholds for 2017-18 year. 

This article contains general advice only and doesn't take into account what you currently have, want and need for your personal circumstances. It is important for you to consider these matters and read the Product Disclosure Statement (PDS) before you make a decision about a superannuation product. Guild Trustee Services Pty Limited ABN 84 068 826 728 AFS Licence No. 233815 RSE Licence No. L0000611 as Trustee of the Guild Retirement Fund ABN 22 599 554 834 (which includes GuildSuper).