Pre-tax perks
Let’s start with concessional contributions, which include the super your employer pays and any extra amounts you choose to salary sacrifice. These are taxed at 15 per cent, which could be lower than your marginal tax rate. By channelling some of your pre-tax income into super (up to the annual cap of $30,000), you may reduce your taxable income and grow your nest egg at the same time. Double win.
You may also be entitled to Low Income Super Tax Offset (LISTO) if you earn less than $37,000 a year. This is where the government pays your super fund up to $500, which represents 15% of your concessional (before tax) super contributions you or your employer pays into your super fund.
After-tax advantage
Want to contribute more? You can also make non-concessional (after-tax) contributions of up to $120,000 per year. These don’t reduce your taxable income, but earnings inside super are taxed at a maximum of 15 per cent – which may still be lower than the rate applied to income or investments held outside super.
A little goes a long way
Even small, regular top-ups can add up over time thanks to compound interest. That’s where your money earns interest – and then that interest earns interest, too. The earlier you start, the more time your contributions have to grow. And if your income is under $62,488 for the 2025/26 financial year, you might also be eligible for a government co-contribution – up to $500 a year – just for putting a bit extra in. It’s basically a free boost to your retirement savings.
Don’t overdo it
There are annual contribution limits, so be mindful of the caps to avoid paying extra tax. And if you’re unsure what’s best for your situation, a chat with a financial adviser can help you make the most of super’s tax-friendly structure.
This article is intended to provide general information only and does not take into account your individual objectives, financial situation or needs. The above information is not tax advice.
Taxation laws are complex and subject to change. Commonwealth Securities Limited (CommSec) does not provide tax (financial) advice under the Tax Agent Services Act 2009 (Cth). You should consider seeking independent tax advice from a registered tax agent, accountant or adviser before you make any decisions based on this information.
This information is not advice and is general in nature. The information has been prepared without taking account of the objectives , financial situation or needs of any particular individual. For this reason, any individual should, before acting on this information, consider the appropriateness of the information, having regards to the individual's objectives , financial situation or needs, and, if necessary, seek appropriate professional advice. You can view the CommSec Terms and Conditions, Product Disclosure Statements, Best Execution Statement and Financial Services Guide, and should consider them before making any decision about these products and services.
Australia’s 10 largest stocks
Check out the top 10 largest companies on the ASX. Log in and add these companies to your watchlist and dive into the exciting world of investing!
Understanding Dividends
Dividends are a company’s way of sharing its profits with its shareholders. They’re payments made by a company to its shareholders.
What are the long-term investment trends?
What are secular investing trends, and the biggest secular trends impacting sharemarkets today.
Important information
All performance information is at 28 February 2025.
Any reference to securities is made for illustrative purposes only and is not a recommendation. Price data may not reflect current market prices. Past performance is not a reliable indication of future performance.
Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945. CommSec is a Market Participant of ASX Limited and Cboe Australia Pty Limited (formerly Chi-X Australia Pty Limited), a Clearing Participant of ASX Clear Pty Limited and a Settlement Participant of ASX Settlement Pty Limited.
This information is not advice and is general in nature. The information has been prepared without taking account of the objectives, financial situation or needs of any particular individual. For this reason, any individual should, before acting on this information, consider the appropriateness of the information, having regards to the individual's objectives, financial situation or needs, and, if necessary, seek appropriate professional advice. You can view the International Shares Terms and Conditions, CommSec Terms and Conditions, Product Disclosure Statements, Best Execution Statement and Financial Services Guide, and the relevant product disclosure documents or equivalent on any ETF, available from the product issuer before making any decision about these products and services.
Investing in overseas markets exposes you to risks including those related to movements in foreign currency exchange rates and market prices.