Making voluntary super contributions can be a strategic way to reduce your tax liabilities while increasing your retirement savings. By making use of salary sacrifice or personal concessional contributions, you have the opportunity to grow your super balance more efficiently and potentially save on tax.

Voluntary concessional contributions offer benefits, such as the ability to claim a tax deduction in your personal income tax return. Personal contributions can make a significant difference in your super balance over time, especially for high-income earners facing higher marginal tax rates.

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What are voluntary contributions?

Voluntary contributions are a way to add extra money to your super account from your after-tax income, savings, or even funds from an inheritance or the sale of an asset. These contributions are separate from the compulsory employer super guarantee payments.

Adding voluntary contributions not only helps grow your super faster, it can also provide tax benefits. Depending on your situation, you may be able to claim a tax deduction or take advantage of government co-contributions. This can make a big difference to your super balance over time and leave you with more money for retirement.

Another option to consider is salary sacrifice. This involves an agreement with your employer to contribute part of your salary to your super before tax is taken out. The sacrificed amount is taxed at 15%, which may be lower than your usual income tax rate, helping you save more and potentially pay less tax over time.

What are the types of voluntary contributions?

In Australia, voluntary super contributions fall into two main categories: after-tax contributions and before-tax contributions. Knowing the difference between these types is important for anyone looking to grow their retirement savings effectively.

After-tax contributions

After-tax contributions, also called non-concessional contributions, come from your take-home pay or other funds that have already been taxed. Since these contributions are made with post-tax money, they aren’t subject to further tax within your super fund.

Before-tax contributions

Before-tax contributions, also known as concessional contributions, are made from income that hasn’t yet been taxed. These contributions typically include salary sacrifice, where part of your pre-tax salary is directed into your super.

Unlike after-tax contributions, these before-tax contributions are taxed at a concessional rate of 15% within your super fund, which may be lower than your marginal tax rate. This can reduce your taxable income, offering immediate tax savings while boosting your retirement savings over time.

What you need to know about voluntary contribution restrictions

When making voluntary super contributions, it’s important to understand the rules and restrictions that apply. These contributions don’t include compulsory employer payments, like the super guarantee, and the types of voluntary contributions your fund can accept will depend on factors like your age, whether your Tax File Number (TFN) is on file, and if you meet the work test. Additionally, different rules apply for contributions once you reach the age of 75, with specific limitations on voluntary contributions after this age.

What voluntary contributions don’t include

Voluntary contributions do not include the compulsory payments made by your employer under the super guarantee. Compulsory employer contributions can be accepted by your super fund at any time, regardless of your age or work hours.

The types of voluntary contributions your super fund can accept depend on several factors. These include your age, whether your Tax File Number (TFN) is on file, whether you need to meet the work test, the fund’s specific rules for accepting contributions, and your total super balance when making non-concessional contributions. If your super fund cannot accept a contribution due to a restriction, they must return the amount to you or whoever made the contribution.

Age-related rules for accepting voluntary contributions

Super contribution rules change based on your age, with different conditions applying before and after you turn 75. These rules help guide the types of contributions you can make and the specific requirements involved as you get older.

Under 75 years of age

If you're under 75 years old during the 2022–23 income year or later, your super fund can accept all types of contributions, except for downsizer contributions. Downsizer contributions can only be made if you're 55 or older from 1 January 2023, or 60 and older from 1 July 2022.

For individuals aged 67 to 74, you must meet the work test or qualify for a work test exemption to claim a tax deduction on personal super contributions.

Aged 75 years or older

Once you reach 75, your super fund can still accept compulsory employer contributions and downsizer contributions. In the 28 days following the month you turn 75, your fund can also accept certain types of voluntary contributions. These include salary sacrifice contributions, other voluntary employer payments like administration fees and insurance premiums, and personal or spouse contributions. After this 28-day window, restrictions on voluntary contributions apply.

Work test and work test exemption

The work test requires you to be employed or self-employed for at least 40 hours in a consecutive 30-day period during the financial year in which you plan to make super contributions. Once this condition is met, you're eligible to contribute for the rest of the financial year.

Being employed for the work test means working for payment in any occupation, trade, or business. However, if your income is passive, such as from investments, or if you're involved in unpaid work, you will not meet the work test.

3 benefits of voluntary contributions

Grow your super faster

Making voluntary contributions can significantly speed up the growth of your superannuation. Even small, consistent contributions—whether after-tax contributions or salary sacrifice—can lead to substantial increases in your super balance over time due to compounding returns. These contributions, when invested, benefit from the lower tax rates applied to earnings within a super fund, helping your retirement savings grow faster.

Less tax on investments

The tax treatment of superannuation contributions is particularly advantageous for high-income earners. Concessional contributions, such as salary sacrifice or other pre-tax contributions, are taxed at a flat rate of 15% within the super fund. This is significantly lower than the marginal tax rate, which can be as high as 47% for those with higher incomes.

By making concessional contributions, high-income earners can reduce the amount of tax they would otherwise pay on their income while boosting their retirement savings.

Claim a tax deduction

To claim a deduction for personal concessional contributions, you need to submit a notice of intent to deduct to your super fund, and the fund must acknowledge receipt of this notice. Once the deduction is claimed, these contributions are treated as concessional contributions and are taxed at a lower rate of 15%, rather than the individual's marginal tax rate, which can be much higher.