Don’t Miss Out on Superannuation Tax Deductions in 2025
When it comes to building long-term wealth, superannuation is one of the most powerful tools available to Australians. But beyond preparing for retirement, your super can also help you save on tax if you know how to use it effectively.
One of the best strategies available in the lead-up to 30 June 2025 is making voluntary super contributions. Here’s what you need to know about superannuation tax deductions.
Why Consider Super Contributions Before 30 June?
Superannuation contributions can reduce the amount of tax you pay this financial year. That’s because most contributions to your super fund are taxed at just 15%, which is likely much lower than your personal income tax rate.
By acting before the end of the financial year, you could:
- Reduce your taxable income
- Build your retirement savings
- Take advantage of unused contribution caps from previous years
- Save thousands in tax
Of course, tax planning is different from financial advice, so please speak with us before you take action. We’ll ensure you stay within your limits and get the paperwork and timing right.
Understanding Concessional Super Contributions
Concessional (or before-tax) contributions include:
- Employer contributions
- Salary sacrifice arrangements
- Personal contributions you claim as a tax deduction
These are taxed at 15% within your super fund (up to a cap of $30,000 per year). This is particularly beneficial if your annual income (plus super) is less than $250,000.
For example, if you earn over $45,000, your marginal tax rate plus Medicare Levy is at least 32%. By contributing to super and claiming a deduction, you’re only taxed at 15%—a significant saving.
Even if your employer doesn’t offer salary sacrifice, you can still make personal contributions and claim the deductions in your tax return.
Can You Catch Up on Contributions?
Yes! If your total super balance is under $500,000, and you didn’t use your full concessional cap in a previous year (going back to 2020), you may be eligible to “carry forward” the unused amount.
This allows you to contribute more than the annual cap and still benefit from the lower tax rate, which is great for businesses with fluctuating income years.
But remember, these unused amounts expire after five years if not used.
Super Options for Low and Middle-Income Earners
Even if you’re not a high-income earner, super still offers benefits:
- If you earn up to $37,000, the Low-Income Superannuation Tax Offset refunds the 15% tax on your concessional contributions, up to $500.
- You may be eligible for a Government Co-Contribution if your income is between $45,400 and $60,400. The government could add 50 cents for every dollar of after-tax super contributions you make, up to $1,000.
What About High-Income Earners?
If your total adjusted income (including super) is over $250,000, concessional contributions are taxed at 30%—still lower than the top marginal rate of 47%.
This is called Division 293 Tax, and it only applies to the portion of contributions that push your income above the $250,000 threshold.
If you go over your $30,000 cap, the excess contributions will be taxed at your regular income tax rate (less a 15% offset), and you can choose to withdraw the excess to help cover the tax.
Don’t Leave It Too Late
We can help you review your super contributions and assess your options well before the end of the financial year. Timing is everything—your contributions need to be received by your fund before 30 June to count for the 2025 year.
For a lot of managed super funds, this means you must make the contribution from your bank account before 10 June and some funds could be even earlier! It pays to check with your fund to make sure you contribute on time.
The sooner we start, the more options we have to structure your contributions properly and ensure you maximise your superannuation tax deductions.
Ready to Take Action On Your Superannuation Tax Deductions Strategy?
Get in touch to book a tax planning meeting, and we’ll help you navigate the rules, avoid excess contribution penalties, and make the most of your superannuation and tax planning strategies.
Let’s make this EOFY work for you. Contact us today and get ahead of 30 June 2025.
