Case Study: The Impact of Salary Sacrificing $40/Week into Your Super
Here’s what would happen if you salary sacrificed just $40 per week into your super.
- You could accumulate an extra $66,200 by retirement.
- Additionally, this strategy could provide an estimated tax reduction of $666 per year, amounting to nearly $20,000 by age 65.
The calculation is based on an annual pre-tax salary of $100,000 at age 35. Calculations account for estimated earnings and tax savings up to age 65.
Use our super contributions comparison calculator to find out more.
What is the difference between concessional and non-concessional contributions?
Concessional contributions
Concessional contributions are payments made to your superannuation fund from your pre-tax income. This can include employer contributions; salary sacrifice and personal contributions you claim a tax deduction on. Concessional contributions are taxed at 15% on entry to your super, which is generally lower than an individual’s marginal tax rate.
Non-concessional contributions
On the other hand, non-concessional contributions are made to your super fund from your after-tax income. This can include personal contributions made from your take-home pay, or contributions from a partner or family member on your behalf. Because non-concessional contributions have already been taxed at your marginal tax rate, they are not taxed when they are received by your super fund.
There are limits (contribution caps) on the amount of concessional and non-concessional contributions you can make to a superannuation fund each financial year.
What are contribution caps?
Contribution caps limit how much you can add to your super each financial year. The cap amount depends on your age, super balance, and what types of contributions are made, after-tax or before-tax.
Before -tax (concessional) contribution caps
The 2024/25 annual cap for all ages and any balance is $30,000 plus the carry forward rule.
After tax (non-concessional) contribution caps
The standard for the 2024/25 financial year is $120,000.
Your eligibility to contribute more than these limit in a single year may be influenced by your total super balance and age, among other criteria through the 'bring-forward' rule. If you exceed the cap, additional tax implications may apply.
This information is of a general nature. Please refer to the legalsuper PDS & TMD available at www.legalsuper.com.au before making any decision. Past performance is not a guide to future performance. Eligibility criteria and contribution caps apply and are available on the ATO website.
