Super Strategies… Make tax-deductible super contributions

By making a personal super contribution and claiming the amount as a tax deduction, you may be able to pay less tax and invest more in super.

How does the strategy work?

If you make a personal super contribution, you may be able to claim the contribution as a tax deduction and reduce your assessable income.

The contribution will generally be taxed in the fund at the concessional rate of up to 15% ¹, instead of your marginal tax rate which could be up to 47% ².

Depending on your circumstances, this strategy could result in a tax saving of up to 32% and enable you to increase your super.


Other key considerations

                  • Personal deductible contributions count towards the ‘concessional contribution’ cap (which is $25,000 in 2020/21) and tax penalties apply if you exceed the cap.
                  • You can’t access super until you meet certain conditions.
                  • If you are an employee, another way you may be able to grow your super tax-effectively is to make salary sacrifice contributions (see opposite page).
                  • If you did not use up your concessional contribution cap in 2018/19 or 2020/21 and meet certain conditions, you may be eligible to carry forward the unused cap amount. This could enable you to make concessional contributions exceeding the annual cap in 2020/21 or future financial year ³.


                  1. Individuals with income above $250,000 in 2020/21 will pay an additional 15% tax on personal deductible and other concessional super contributions.
                  2. Includes Medicare Levy.
                  3. Unused cap amounts can be carried forward for up to five years. Other conditions apply. To find out more visit


Case study

Bob, aged 55, is self-employed, earns $80,000 pa and pays tax at a marginal rate of 34.5% (including the Medicare levy).

He’s paid off most of his mortgage, plans to retire in 10 years and wants to boost his retirement savings.

After speaking to a financial adviser, he decides to make a personal super contribution of $10,000 and claim the amount as a tax deduction.

By using this strategy, he’ll increase his super balance. Also, by claiming the contribution as a tax deduction, the net tax saving will be $1,950.



Salary sacrifice contributions

If you are an employee, you may want to arrange with your employer to contribute some of your pre-tax salary into super. This is known as ‘salary sacrifice’.

Like making personal deductible contributions, salary sacrifice may enable you to boost your super tax-effectively. There are, however, a range of issues you should consider before deciding to use this strategy.

Your Pinnacle adviser can help you determine whether you should consider salary sacrifice instead of (or in addition to) making personal deductible contributions.


Seek advice

To find out whether you could benefit from the above strategy, you should speak with your Pinnacle adviser and your registered tax agent.


Source: MLC