The four key facts about super you need to know if you want to pay less tax in 2022
Is fair to say double-digit investment growth may not return to the investment market for some period of time, so making sure we get good value for what we are saving to invest, is more important than ever.
Read in this article:
- The four keys facts about super you need to know if you want to pay less tax
- Here are 4 key things you need to know about superannuation, before you can start to think about adding more to your super saving machine.
- Don't miss the opportunity to top up your super and pay less tax
- Super is often seen as a tax effective way to save for your future
- Retirement will come to us all
- Frequently Asked Questions: Superannuation To-Ups
While super is seen as a low tax saving environment, there are limits and official caps to how much money you can put into your super (the cynic would say because the government doesn't like to give away too many tax deductions), so it's worth knowing what your options are.
The four keys facts about super you need to know if you want to pay less tax
Is fair to say that double-digit investment growth may not return to the investment market for some period of time so making sure we get good value for what we are saving to invest, is more important than ever.
While super is seen as a low tax saving environment, there are limits and official caps to how much money you can put into your super (the cynic would say because the government doesn't like to give away too many tax deductions), so it's worth knowing what your options are.
What do you need to keep in mind when thinking about saving in Super?
Here are 4 key things you need to know about superannuation, before you can start to think about adding more to your super saving machine.
- You can contribute up to $27,500 each financial year before tax into your super fund (the technical term is concessional contribution) with a tax rate of 15%.
- You can contribute up to $110,000 each financial year after tax (the technical term is non-concessional contribution) every year.
- All employees (regardless of the number of hours worked) must now contribute 10% of their income pre-tax to their Super, under the government's compulsory Superannuation Guarantee Charge (the technical term is SGC or SG for short).
- All the earnings inside your super investments once you're retired up to $1.7 million are tax free.
Don't miss the opportunity to top up your super and pay less tax
If your employer is depositing 10% of your salary each year into super and this amount is less than the maximum annual cap of $27,500, it might be worth making up some of that available difference as a form of forced saving and take advantage of the reduced tax rate of 15%.
- Talk to us about whether a Salary Sacrifice strategy might suit your needs.
Pro Tip: Changes on the horizon to Super laws will be the lowering of the minimum age from 65 to 60 for home owners downsizing their family home and wanting to top up their super fund balance. Downsizers can contribute an additional $300K per person into super - free from contribution caps, limitations, additional taxes, and alike.
- Talk to us about whether Downsizing Contributions into Super might be a strategy that can suit your needs.
Super is often seen as a tax effective way to save for your future
It's so good the government imposes maximum caps and limitations on getting money into your super so you need to If you expect to retire, you need to upgrade your financial literacy now are so you can take advantage of any long-term compounding interest opportunities in your investments.
- Yes, there are limits to understand and restrictions to consider for your personal situation - that's why you need to talk with your financial adviser about what might be right for you.
Retirement will come to us all
Super is officially a permanent part of Australian life and retirement planning for every employee. If you’re needing to catch up on missed opportunities to top up your super, if you're looking to bring forward after-tax contributions from the sale of an asset, maybe an inheritance or perhaps a redundancy, knowing these four basic foundations of your super can help you plan for a more predictable future.
Frequently Asked Questions: Superannuation To-Ups
How do "Concessional" contributions save me tax?
Concessional contributions are made before you pay income tax. Instead of being taxed at your marginal rate (which could be as high as 47%), these funds are taxed at just 15% within the fund. The math for your savings looks like this:
$$\text{Tax Saved} = \text{Your Marginal Tax Rate} - 15\%$$For high earners, this is an immediate and significant boost to their long-term investment capital.
What are the current contribution caps for 2026?
While the 2022 caps were lower, the current indexed caps for the 2025/26 financial year allow for:
- Concessional (Before-tax): $30,000 per year.
- Non-Concessional (After-tax): $120,000 per year.
What is the "Downsizer Contribution" and who is it for?
The Downsizer Contribution allows Australians aged 55 and over to tip up to $300,000 (per person) into their super fund following the sale of their family home. This is a powerful strategy because these funds do not count towards your standard annual caps, allowing for a massive "catch-up" in retirement savings regardless of your work status.
Is all super income tax-free once I retire?
Once you reach your "preservation age" and move your super into the Retirement Phase, all investment earnings within the fund become tax-free. Furthermore, for most Australians over age 60, any income payments or lump sums you draw from the fund are also 100% tax-free. This is what makes super the ultimate long-term compounding machine.
Call us today on 1300 137 403 or email us here for a no-obligation private chat about your situation.
Drew Browne is a specialty Financial Risk Advisor working with Small Business Owners & their Families, Dual Income Professional Couples, and diverse families. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His business Sapience Financial Group is committed to using business solutions for good in the community. In 2015 he was certified as a B Corp., and in 2017 was recognised in the inaugural Australian National Businesses of Tomorrow Awards. Today he advises Small Business Owners and their families, on how to protect themselves, from their businesses. He writes for successful Small Business Owners and Industry publications. You can read his Modern Small Business Leadership Blog here. You can connect with him on LinkedIn. Any information provided is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance.
