This section gives you more information on technical and defined terms for superannuation.
We provide links to other sites for those who wish to dive into the detail, or be across the latest legislation and regulatory changes.
How the super contribution cap works
One way of topping up your super is to make additional contributions. There are two important contribution limits to be aware of: ‘concessional’ (before-tax) and ‘non-concessional’ (after-tax) contributions caps.
Concessional contributions may be paid into your super from income that hasn’t been taxed. Non-concessional contributions are amounts paid into your super from income that you have already paid tax on.
Both types of contributions have ‘caps’ on the amount you can put in each financial year. If you exceed these caps you may have to pay extra tax.
- ATO: contribution caps
- SuperGuru: contribution caps
- Eight ways to boost your superannuation
- Tips for managing your super throughout your life
How to split your super contributions
To help boost your spouse’s super, you may be able to split some of your concessional super contributions with your spouse. This could be an attractive option if your spouse is in part-time work or has taken an employment career break.
Contributions splitting not only gives a boost to a spouse’s super balance but it can also benefit couples where one spouse’s super balance is set to exceed individual limits.
To split contributions, you can download a form from the ATO and generally the split is only permitted in the financial year immediately after the year in which the contributions were received by your super fund.
How to boost your spouses' super
If your spouse isn’t working, or is a low income earner, you can boost their super by making a spouse super contribution. These contributions are after-tax contributions and count towards the receiving spouse’s non-concessional contributions cap.
You may be able to claim a tax offset on making spouse contributions if all the required conditions are met.
How government super co-contributions work
If you’re a low-income earner making after-tax contributions to your super, the government has a scheme to help give your balance a lift.
Known as co-contributions, the government contributes an amount to your super based on your income and how much after-tax contributions you made in that financial year.
The amount is automatically worked out when you lodge your tax return and other factors may impact your eligibility, such as your age and superannuation balance.
- ATO: government co-contributions
- ATO super co-contribution calculator
- SuperGuru: government co-contributions
- How to get an extra $500 in your super
- Understanding the First Home Super Saver Scheme
How personal contributions can boost your super
Personal contributions into your super fund are a way you can boost your super using your take-home salary or personal savings. These contributions count towards your non-concessional contributions cap except to the extent you are allowed a tax deduction for the contributions.
How salary sacrifice works
Salary sacrificing is a voluntary arrangement between you and your employer where you agree to redirect some of your before-tax (or gross) salary into super. It may be a tax effective strategy to increase your super balance.
Salary sacrifice contributions are concessional contributions and they count against your concessional contributions cap. The sacrificed amount of your salary is not counted as income to you for tax purposes.
What is a super beneficiary nomination and how does it work?
A beneficiary is a person you nominate to receive your super if you die. There are two key types of beneficiary nominations:
- A binding nomination means the trustee of your super fund is legally required to pay your benefit to the person or persons you have nominated when you die – as long as the nomination is valid at the time of your death.
- While a trustee will take your non-binding nomination into consideration when making a decision about who to pay your death benefit to – they are legally obliged to determine who your dependents are as well as any other relevant considerations at the time of your death. Your benefit will be paid to those who the trustee considers are dependent on you and in some cases this may not be the person or people whom you have nominated.
How to access your super upon retirement
Everyone becomes entitled to access their super when they reach age 65, but there are a number of conditions when it can be accessed earlier.
- You have reached your preservation age and have retired
- Under the transition to retirement rules
- Other circumstances related to medical conditions or severe financial hardship
How does the age pension work with your super?
Not everyone is able to save enough super to fully support themselves when they retire and this is where Federal Government support through the age pension can help.
The age pension is income and assets tested, which means the amount you receive depends on any other income you earn or are deemed to earn from sources such as super, investments or paid employment, and on the assets you or entities you control, own.
For more information including qualifying criteria, there are plenty of resources available.
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