There are several ways that the Australian Government encourages us to save for retirement:

• For most employees their employer is required to contribute 11.5% (from 1 July 2024) equivalent of their salary each year as a mandatory Super Guarantee (SG) contribution. This rate has been gradually increasing by 0.5% each financial year until it reaches 12% in 2025/26;
• Individuals may be able to arrange with their employers to salary sacrifice further contributions into their super fund;
• Individuals may be able to make additional voluntary personal contributions to their super fund and may be eligible to claim a tax deduction;
• Individuals may be eligible to receive a government co-contribution when they make after-tax personal contributions to superannuation;
• Contributions can be made for a spouse, for which the contributing spouse may be eligible for a tax offset;

Investment earnings and contributions eligible for a tax deduction (including both employer super contributions and voluntary before-tax personal super contributions) are taxed at a contributions tax rate of 15% when received by the super fund, with the tax forwarded to the ATO. Whilst a 15% contribution tax is payable, the tax rate may be considerably lower than the individuals marginal tax rate that would apply to earnings and income generated in their own name.

Please note: Individuals with income and concessional contributions totalling more than $250,000 will be liable to pay an additional contributions tax of 15% (called Division 293 tax) on their voluntary before-tax personal super contributions.
Individuals with low levels of income may be eligible to have tax on their superannuation contributions refunded.

Remember, your superannuation is intended to be there for your retirement. If you do contribute additional funds to superannuation, it is important to understand that this money will need to remain in the superannuation fund environment until you satisfy one of the conditions of release, such as turning 65 years of age.