Grow super and pay less tax in one move!

| Share

Did you know that before-tax super contributions can not only grow your super faster, but might also mean you pay less tax? Here, the experts from Mine Wealth + Wellbeing explain the strategy to see it if can work for you...

What are before-tax super contributions?

A before-tax super contribution is the money your employer puts into your super account before any tax is taken out. Before-tax contributions include compulsory 9.5 per cent employer contributions and any extra amounts your employer agrees to pay for you. These extra before-tax contributions are often referred to as 'salary sacrifice'.

Why make before-tax contributions?

  • Reduce your tax: Depending on your personal situation, making before-tax contributions may reduce your taxable income and hence the amount of tax you have to pay. Additionally, if you earn less than $300,000 pa, you only pay 15 per cent contributions tax on the before-tax contribution amount, instead of your personal income tax rate, which can be up to 47 per cent including Medicare levy.
  • More money for super, less for the tax man: Because you only pay 15 per cent tax on a before-tax contribution rather than the personal income tax rate that would apply if you made the same after-tax contribution, the tax you save ends up in your super. This means your super may grow faster while your take-home pay stays the same.

How to arrange before-tax contributions

Making extra before-tax contributions is a benefit your employer may provide. You need to check whether they’ll make extra before-tax contributions for you. If so, they’ll provide you with the necessary forms.

How much you can contribute

Because of the tax breaks you receive when putting money into super, the government limits how much you can contribute to $30,000pa or $35,000pa if you’re aged 50 and over. Any amounts exceeding the before-tax contribution cap are taxed at your personal income tax rate.

Are before-tax contributions preserved?

Yes. This means the money you contribute must stay in super until you’re eligible to access it. Generally, this means turning 55 and retiring, or slightly later if you’re born after 1 July 1960.

Before you decide to make before-tax contributions...

  • Check your ability to receive government co-contributions
  • Check other benefits your employer provides to you, such as overtime and holiday loadings
  • Check whether your employer will reduce the amount of Superannuation Guarantee contributions they make for you.

Because making before-tax contributions can be complex, Mine Wealth + Wellbeing recommends you seek financial advice before entering into a before-tax contribution arrangement with your employer.

Not a Mine Wealth + Wellbeing member?

You’re welcome to join and enjoy access to this advice service to get on track and start making confident financial choices.

More information

If you have any questions or need help with making contributions, call us on 13 MINE (13 64 63), Monday to Friday, 8am to 6pm (AEST or ADST when in operation) or email This email address is being protected from spambots. You need JavaScript enabled to view it..

If you have a superannuation question and think the answer might benefit other Mining Family Matters readers too, please ask away!

More superannuation articles:

This is general information only and does not take into account your financial situations, needs or objectives. Before acting, you should consider whether the information is appropriate for you and read our Product Disclosure Statement (PDS). If there’s any inconsistency between this document and the PDS or Trust Deed the terms of the PDS or Trust Deed prevail. This information is based on our understanding of current Australian laws and assumes they will remain unchanged.

Issued by AUSCOAL Superannuation Pty Ltd ABN 70 003 566 989 AFSL 246 864 Trustee for Mine Wealth and Wellbeing Superannuation Fund ABN 16 457 520 308. Mine Wealth + Wellbeing Financial Advice is a trading name Mine Wealth and Wellbeing Services Pty Ltd ABN 49 051 315 014 a Corporate Authorised Representative of Adviser Network Pty Ltd ABN 25 056 310 699 AFSL 232729.