Superannuation Optimisation
Accelerating Retirement Savings
Most high-income earners leave thousands in tax savings on the table every year. Professionals earning $140,000+ typically have multiple opportunities to accelerate retirement savings whilst reducing tax - yet few maximise them.
The difference between basic super contributions and strategic superannuation planning can add hundreds of thousands to your retirement balance over a decade. Understanding and implementing the right contribution strategies may significantly improve your long-term wealth position.
How Superannuation Tax Concessions Work
Insurance Through Superannuation
Superannuation generally offers preferential tax treatment compared to personal investments. Concessional contributions are taxed at 15% inside super, compared to marginal tax rates of up to 47% (including Medicare Levy). For high-income earners, this tax differential creates significant opportunities.
Investment earnings inside super are typically taxed at a maximum of 15% during accumulation phase, compared to marginal tax rates on personal investments. In pension phase, earnings may be tax-free subject to eligibility and transfer balance cap restrictions.
Key Contribution Strategies
Concessional Contributions
Concessional contributions include employer contributions and salary sacrifice arrangements, with a cap of $30,000 for the 2024-25 financial year. These contributions are taxed at 15% in your super fund.
For someone on the top marginal tax rate (47% including Medicare Levy), a $30,000 concessional contribution saves up to $9,600 in tax annually compared to receiving the same amount as salary.
Important: High-income earners with combined income and concessional contributions exceeding $250,000 may be subject to Division 293 tax—an additional 15% tax on concessional contributions above this threshold.
Catch-Up Contributions
If your total super balance was less than $500,000 at the end of the previous financial year, you may be able to carry forward unused concessional contribution caps from up to five previous years (starting from 2018-19).
This strategy can allow contributions significantly above the annual $30,000 cap for eligible individuals who haven't maximised contributions in previous years.
Non-Concessional Contributions
Non-concessional contributions are made from after-tax income with a cap of $120,000 per year for 2024-25. These contributions aren't taxed when entering super.
Eligible individuals under age 75 may trigger the bring-forward rule, allowing contributions up to $360,000 over three years. Eligibility depends on your total super balance at 30 June of the previous financial year.
Note: If your total super balance equals or exceeds the general transfer balance cap ($1.9 million for 2024-25), your non-concessional cap is nil.
Spouse Contributions
Making contributions to your spouse's super may entitle you to a tax offset of up to $540 if your spouse's income is below $40,000. This strategy can help balance super between partners whilst accessing tax benefits.
Contributions must be non-concessional and your spouse must not have exceeded their non-concessional cap or have a total super balance equal to or exceeding the general transfer balance cap.
Strategic Investment Allocation
Beyond contribution strategies, how your super is invested significantly impacts long-term outcomes. High-growth investment options may be appropriate for younger members with longer timeframes, whilst more conservative approaches might suit those closer to retirement.
Your investment strategy should generally align with your risk tolerance, investment timeframe, and retirement objectives.
Salary Sacrificing Strategy
For employed professionals, salary sacrificing involves directing pre-tax salary into super rather than receiving it as income. The sacrificed amount is taxed at 15% in super (plus potential Division 293 tax for high earners) rather than your marginal rate.
Example (Hypothetical):
A medical professional earning $200,000 annually salary sacrifices $20,000 to super:
Without salary sacrifice: Pay $6,600 tax on that $20,000 (at 33% marginal rate including Medicare Levy)
With salary sacrifice: Super fund pays $3,000 tax (at 15%)
Potential annual tax saving: $3,600
Couples with income disparities who can benefit from spouse contribution strategies
Note: Individual outcomes vary based on income, tax rates, and personal circumstances. This is a simplified example for illustration only.
Is Superannuation Optimisation Right for You?
These strategies generally suit:
High-income professionals earning $140,000+ who can maximise tax-effective contributions
Medical professionals and specialists with strong cashflow who want to build retirement wealth efficiently
Business owners with fluctuating income who want flexibility in contribution timing
Executives approaching retirement who want to maximise super in final working years
Couples with income disparities who can benefit from spouse contribution strategies
Superannuation optimisation requires careful planning around cashflow, age restrictions, contribution caps, and total super balance thresholds.
Taking the Next Step: How Summit Financial Planning Can Help
We work with high-income earners to model superannuation strategies aligned with your broader wealth objectives. Our service includes:
Comprehensive contribution capacity analysis based on your income, age, and super balance
Tax modelling comparing different contribution strategies
Catch-up contribution eligibility assessment
Salary sacrifice arrangement guidance
Integration with property investment, debt recycling, and tax minimisation strategies
Ongoing reviews as legislation, caps, and your circumstances change
We can help you identify whether you're maximising the opportunities available through strategic superannuation planning.
For professional, personal advice tailored to your circumstances, please reach out below.
At Summit Financial Planning, we excel in precise financial management tailored to your needs. Contact us today for expert assistance.
Summit Financial Planning ABN 28 856 289 615 is a Corporate Authorised Representative of Lifespan Financial Planning Pty Ltd AFSL No. 229892 ABN 23 065 921 735.
Jeremy Douglas is an Authorised Representative (ASIC NO. 001238064) of Lifespan Financial Planning AFSL No. 229892.
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