How to boost your super with your Stage 3 tax cut


Stage 3 tax cuts arrive on July 1. If you don't need the extra cash to manage living costs, the tax savings can give your super a valuable boost.

Who doesn't love a tax cut?

From July 1, workers will enjoy an uptick in take-home pay - anywhere from $354 annually for those on a yearly income of $30,000, up to $4529 for high income earners.

how to boost your super with your stage three tax cuts

The catch is that the tax savings won't be delivered as a lump sum.

Instead, they'll be drip-fed into your regular pay.

So, while a worker on, say, $70,000 annually, will have an extra $1429 in take-home pay over the course of a year, the weekly difference is just $27.

The risk is that this money will be swept up in regular spending.

One way to maximise the tax savings is to grow your super. There are two main ways to nail it.

Salary sacrifice the tax savings

'Salary sacrifice' means asking your employer to have part of your before-tax wage or salary paid directly to super instead of receiving the money as cash in hand.

These before-tax ('concessional') contributions are taxed at 15%, which is likely to be a lot lower than your personal marginal tax rate.

Your boss doesn't have to agree to salary sacrificing. But you can make it easy by downloading a salary sacrifice form from your super fund's website, filling it out, and handing it to your employer or HR department.

Choose either a percentage of your pay, or a fixed dollar amount, to be salary sacrificed.

Even if you only have the State 3 tax cuts paid into super, they can make a surprising difference over time.

As a guide, a 40-year old woman on an annual wage of $70,000, who salary sacrifices the weekly $27 tax cut, can accumulate an extra $43,503 in super by retirement at age 67.

Head to MoneySmart's online Superannuation Calculator to see how the tax cuts could grow your super.

Make your own concessional contributions

If the boss won't agree to salary sacrificing, consider a do-it-yourself approach.

It's as easy as setting up an automatic transfer out of your everyday account and into your super each pay day.

These personal contributions can often be tax deductible as long as you let your fund know you plan to claim the contributions on tax before lodging your 2024/25 tax return.

This can mean a turbocharged tax refund next financial year, which provides more money to grow retirement savings.

Why 2024 is a good time to grow your super

The new financial year brings a few key changes to super.

From 1 July, your employer's compulsory contributions will jump from 11% to 11.5%.

At the same time, the annual limit on concessional super contributions, which includes the boss's contributions, salary sacrifice and personal deductible contributions, will rise from $27,500 annually to $30,000.

If you are likely to use up all your concessional contributions, you may be able to tap into any unused limits from the past five years.

Or put the extra disposable income from tax cuts into super as non-deductible contributions. The limits for these are also increasing - to $120,000 annually, up from $110,000 in 2023/34.

If you're a low income earner, using the tax cuts to make a non-deductible super contribution could see you eligible for a government-paid co-contribution.

It makes the new financial year a good time to add to your super.

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A former Chartered Accountant, Nicola Field has been a regular contributor to Money for 20 years, and writes on personal finance issues for some of Australia's largest financial institutions. She is the author of Investing in Your Child's Future and Baby or Bust, and has collaborated with Paul Clitheroe on a variety of projects including radio scripts, newspaper columns, and several books.