7 Smart Super Strategies to Save Tax in Australia

Did you know there are many smart superannuation strategies that can cut your tax bill? They aren't just for the wealthy or those nearing retirement; these powerful tools can suit a wide range of incomes and ages.

This guide will walk you through 7 superannuation strategies—from beginner to advanced—that you can use to legally pay less tax.

Disclaimer: This information is for educational purposes only and is not financial advice. Superannuation and tax rules are complex. Please do your own research or consult a professional.

1. Spouse Super Contributions

This is a great strategy for couples where one partner earns less than $40,000. It involves one partner adding after-tax money to their spouse's super account.

• The Benefit: The contributing partner can receive a tax offset of up to $540.
• How to get the full offset: The receiving partner’s income must be less than $37,000, and the contribution must be at least $3,000.
• The Taper: If the receiving partner earns between $37,000 and $40,000, the tax benefit gradually decreases.

This is a fantastic way to boost your partner's retirement savings while getting an immediate tax saving for yourself.

2. Government Co-Contribution

This isn't a tax saving, but it's like getting free money for your super from the government. If you make an after-tax super contribution and your income is below a certain threshold, the government will also contribute to your super.

• The Benefit: For FY24, the maximum benefit was $500, which you received if you contributed $1,000 of your own money and your income was under $43,445.
• The Taper: The government's contribution gradually decreased and disappeared entirely once your income reached $58,445.
• FY25 Update: For the 2025 financial year, the income thresholds increased to $45,400 and $60,400 respectively, meaning more people could benefit.

You can use the super co-contribution calculator on the ATO website to estimate your entitlement.

The next five strategies all fall under the umbrella of concessional contributions—money that goes into super from your pre-tax income.

3. Salary Sacrifice

This is an arrangement you make with your employer to direct a portion of your pre-tax salary straight into your super. It's a simple and effective way to reduce your taxable income and build your super faster.

Example:

If your taxable income is $100,000 and you salary sacrifice $10,000 into super, you'll pay personal income tax on only $90,000. The $10,000 in super is taxed at just 15%. This results in a total tax saving of $1,950.

4. Personal Deductible Contributions

This strategy provides the same tax benefits as salary sacrifice but offers more flexibility. Instead of involving your employer, you simply contribute your own savings to your super fund and then submit a "Notice of Intent to Claim a Tax Deduction." If you're between 18 and 67, you easily qualify for this strategy.

These contributions, along with your employer's payments and any salary sacrifice, all count towards your concessional contribution cap. For FY24, this cap was $27,500, and it increased to $30,000 for FY25.

5. First Home Super Saver Scheme (FHSSS)

If you're a first home buyer, this government scheme allows you to use your super fund as a high-return savings account. You can make voluntary contributions (like salary sacrifice or personal deductible contributions) and later withdraw them, along with their earnings, to use as a deposit for your first home.

• The Limits: You can have a maximum of $15,000 of your contributions from any one financial year released, up to a total of $50,000 across all years.
• The Benefit: For a couple, using this strategy to its full potential can result in a total tax saving of around $15,000, providing a significant 15% uplift to that portion of their home deposit.

6. Carry-Forward "Catch-Up" Contributions

This is where the strategies get more advanced. If your total super balance was less than $500,000 on the 30th of June of the previous financial year, you can use any unused concessional contribution cap amounts from the last five financial years.

This is incredibly useful if you have a one-off high-income event, like selling an investment property and creating a large capital gain.

Example:

John, a retiree, sells a property in FY24, resulting in a taxable income of $179,384. He hasn't made any super contributions for years and his super balance is below $500,000. He can use the carry-forward rule to make a personal deductible contribution of $157,500 (using five years of unused caps plus the current year's cap).

• This reduces his taxable income to just $21,884, which was below the effective tax-free threshold for FY24.
• The Result: He pays zero personal income tax on a very large income event.

You can check your unused cap amounts through your MyGov ATO service. Note: Any unused cap from the 2018/19 financial year expired on the 30th of June 2024.

7. The SMSF Contribution Reserving Strategy (Advanced)

If you thought the last strategy was juicy, this one takes it to the next level. For members of a Self-Managed Super Fund (SMSF), there is a way to use up to seven years' worth of concessional caps to manage a high-income event in a single year.

It works by combining the carry-forward rule with a special "contribution reserving" strategy. This allows an eligible SMSF member to make a contribution in June, claim the tax deduction for it in the current financial year, but have the contribution count towards the next financial year's cap.

Warning: This is a highly advanced and complex strategy. It should only be attempted with professional financial advice.

Using this strategy in FY24, an eligible person could potentially contribute and claim a tax deduction for $187,500. This could allow someone like John from our previous example to manage an even larger capital gain of $418,768 and still pay zero personal income tax.

This is a highly advanced strategy that is only available to SMSF members, but it demonstrates the incredible power of superannuation for tax planning.