Turn Super Contributions into a Tax-Saving Machine

APRIL 2026

KEY POINTS: 

• The annual concessional (before-tax) contributions cap is currently $30,000.

• Employer contributions, salary sacrifice, and personal deductible super contributions all count towards this cap.

• Unused cap amounts can be carried forward for up to five years if your total super balance was under $500,000 at the previous June 30.

Have you reached your concessional contributions cap?

The ATO explains that this cap is the maximum amount of before-tax contributions you can add to your superannuation each year without facing additional taxes. Currently, the concessional contributions cap stands at $30,000, which amounts to $2,500 per month.

If you have not yet reached your concessional contributions cap, you can make additional before-tax contributions to your superannuation. These extra contributions are taxed at a concessional rate, typically 15%, which is often lower than your marginal tax rate.

By contributing more up to the cap, you not only build your retirement savings, but also reduce your taxable income, resulting in potential tax savings. This strategy allows you to maximise both your super balance and your tax benefits before you hit the annual limit.

If you exceed your concessional contributions cap, any excess concessional contributions (ECC) will be added to your assessable income. These ECC will be taxed at your marginal tax rate, with a 15% tax offset reflecting the contributions tax already paid by your superannuation fund. In effect, the tax payable on the excess amount is reduced by 15%.

Making Catch-Up Concessional Contributions

There may be times in your life when you are unable to make contributions to your superannuation. For instance, you might need to take a break from work to pursue further studies or to care for your children. Alternatively, you may have other financial priorities, such as paying off your mortgage, which take precedence over contributing to your retirement savings.

However, if your circumstances change and you find yourself in a position where you can and wish to contribute more towards your retirement, you may have the option to make catch-up concessional contributions. This provision allows you to take advantage of any unused portion of your concessional contributions cap. If, in a given year, your total concessional (before-tax) contributions are less than the annual cap (currently $30,000), you can carry forward the unused amount for up to five years. This can help you boost your super balance when you have the financial capacity to do so.

Catch-up contributions were introduced to help people whose work patterns may have interrupted their ability to save for retirement. They’re particularly useful if you’ve taken time off work, worked part time, or experienced periods of reduced or no super contributions. This option also benefits those who wish to boost their super balance later in life when they have more disposable income.

Case Study

Here’s a case study illustrating how someone can grow their superannuation while reducing their tax liability.

An IT project manager earns $155,000 a year and wants to minimise taxable income whilst building retirement savings. His current super balance stands at $140,000. He decides to contribute an extra $800 per month before-tax using a salary sacrifice strategy. Over the year, this totals $9,600.

 As a result, his taxable income drops from $155,000 to $145,400. Since he hasn’t reached the concessional contributions cap in previous years, he uses the carry-forward rule to add an extra $20,000 to super and further lower his taxable income.

 For even more benefits, he makes a $3,000 after-tax contribution to his spouse’s super. This spouse contribution qualifies him for a tax offset of up to $540, as long as his spouse’s annual income is less than $40,000. If the spouse earns more than that, the tax offset doesn’t apply. The tax offset gradually phases out for spouse incomes between $37,000 and $40,000, so the benefit decreases as the spouse's income approaches the upper threshold.

Seek advice

Superannuation is complex and the key to maximising this strategy, if it’s right for you, is time. If you would like to discuss your eligibility for any of these superannuation and tax strategies, reach out to our specialists to ensure you can take action ahead of June 30.

Advice Disclaimer: This article is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS) or other offer document prior to making an investment decision in relation to a financial product (including a decision about whether to acquire or continue to hold).