Personal superannuation contributions

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May 30 2019
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Making regular contributions is necessary in order to facilitate the growth of your retirement assets and benefits. However, experts agree that making personal contributions can help your retirement benefits grow faster than simply relying on the superannuation guarantee (SG) contributions.

Here we explain the different types of voluntary personal contributions that can help you boost your super fund balance.

What is the “superannuation guarantee” contribution?

Employed individuals are generally entitled to SG contributions. However, there are some conditions that you need to satisfy in order to be eligible for the compulsory 9.5 per cent SG contributions.

Your employer is required to make SG contributions if you are:

At least 18 years old
Paid a gross wage of at least $450 per week

For minors (individuals below 18 years old), you must work for more than 30 hours per week to be eligible for SG contributions.

You may also make personal super contributions through a salary sacrifice arrangement with your employer.

What if I am unemployed?

For unemployed individuals such as stay-at-home parents, you may still enrol in a fund as long as you can contribute to it and there is enough balance to pay the fees.

You may also increase your super fund balance even without gainful employment through personal super contributions.

The different kinds of personal contributions

You can make before tax (concessional) or after-tax (non-concessional) personal contributions during the accumulation phase. The type of contribution you make determines whether you are eligible to claim concessions in your tax return.

If you are eligible for tax offsets and/or deductions, however, you will not receive the concession unless you provide your tax file number (TFN) to your super fund.

Concessional contributions

Concessional super contributions refer to the money that is contributed from your gross salary if you are employed. However, even unemployed individuals may benefit from concessional contributions if they have an employed spouse.

Salary sacrifice contributions for the employed
This refers to personal superannuation contributions that are paid from your pre-tax wage through your employer.

This may also count as part of the SG contributions and decrease the actual rate that the employer is required to pay – make sure to discuss the terms of your salary sacrifice so this doesn’t happen.

Spouse contribution on behalf of low-income or unemployed spouse
Spouse super contributions or contribution splitting refers to voluntary contributions that an employed individual may make on behalf of their lower-income or unemployed spouse.

To be eligible, opposite or same-sex spouses must satisfy the following conditions:

The couple must meet the definition of married or de facto spouses according to the Australian family law.
The contributing spouse’s non-concessional contributions and super balance must be left untouched as this strategy may only be used for concessional or pre-tax contributions.

By contributing to their partner’s super, the contributing spouse may be eligible for the spouse contribution tax offset of up to $540 on their tax return.

To execute a contribution split, the contributing spouse must complete the Notice of intent to claim or vary a deduction for personal super contributions from the Australian Taxation Office or a similar form from their super fund.

Non-concessional contributions

Non-concessional super contributions refer to contributions that you make with your after-tax dollars or your take-home pay. It may also come from other sources such as inheritance or savings.

You may directly make non-concessional contributions to your fund, for instance, by transferring money from your personal bank account.

Spouse contribution
Higher-income spouses may also make non-concessional spouse super contributions to their unemployed or lower-income spouse earning a maximum of $37,000 annually. However, eligibility for the spouse contribution depends on the receiving spouse’s age.

Below 65 years old	The receiving spouse’s fund will accept non-concessional contributions from the contributing spouse without restrictions.
65 to 69 years old	The receiving spouse must satisfy the work test before any contribution is accepted by the fund.
70 years old and over	The fund will no longer accept spouse contributions.

Similar to contribution splitting, non-concessional contributions may also grant the contributing spouse a tax offset on their tax return. The offset may be computed as the lower amount between:

$540 (18 per cent of $3,000) which decreases by $1 for each $1 income in excess of the $37,000 threshold
18 per cent of the contributed amount

Explore Nest Egg to learn more about superannuation.

About the author

Louise is a content producer for Momentum Media’s nestegg who likes keeping up-to-date with all the ways people can work towards financial stability in 2019. She also enjoys turning complex information into easy-to-digest, practical tips to help those who want to achieve financial independence.

About the author

Louise is a content producer for Momentum Media’s nestegg who likes keeping up-to-date with all the ways people can work towards financial stability in 2019. She also enjoys turning complex information into easy-to-digest, practical tips to help those who want to achieve financial independence.

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