Energy Super is moving to 333 Ann Street, Brisbane, Qld 4001 on 7 December 2021.

During December 2021, appointments with a financial adviser will still be at our old Eagle Street office. From Monday 3 January 2022, appointments with a financial adviser will be at our Ann Street office. For all our new details visit our contact us page.

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Sorting your super - before tax vs after tax

Published: 01 Jul 2021

Unsure about how to make super contributions?

Before tax (concessional)

If your employer pays into your super fund, including Super Guarantee and salary sacrifice payments, it’s called a concessional contribution, in other words you pay a concessional rate of tax.

Because the money’s going straight into super rather than paid to you as salary (where you’d pay income tax), concessional contributions are sometimes called before-tax contributions.

If you pay money into super yourself and claim it as a tax deduction, then that becomes a concessional contribution as well. There’s a 15% tax on concessional contributions, so on a $1,000 contribution, you’ll have $850 in your fund after tax.

After tax (non-concessional)

If you pay into super from your after-tax pay or savings (so you’ve already paid income tax yourself on the amount) and don’t claim a tax deduction, it’s called a non-concessional contribution.

The good news? There’s no contributions tax on non-concessional contributions. Put $1,000 into super and you’ve got the full $1,000 working for you. But remember that you might have paid tax of up to 47% including the Medicare Levy to earn that money.

Which one is best?

If you don’t make a tax deduction, making before-tax contributions might work best. That’s because paying 15% contributions tax is better than having the money paid to you as salary, which will be taxed at rates up to 47%. But keep in mind, if your income tax rate is closer to 15% e.g. you earn less than $50,000 p.a. you may be better off with after tax contributions.

That (relatively) generous tax treatment means the government puts limits, called caps, on how much you can pay into super each year. Before tax contributions are capped at $27,500, with after tax contributions capped at $110,000. Pay more and you could be slugged with penalties.

If you want to dig down into the nitty gritty, there are other differences as well:

 

Before tax

After tax

Tax deduction on contributions

Yes

No

15% contributions tax payable

Yes

No

Annual contributions limit

$27,500

$110,000

Tax-free when withdrawn from super

Not always

Yes

Tax-free when paid to beneficiaries

Not always

Yes

Qualifies for spouse tax offset

No

Yes

Qualifies for LISTO

Yes

No

If you’re considering getting some advice on your finances, why not talk to one of the qualified financial advisers today on 1300 436 374. The financial advice team will work closely with you to help you achieve your financial goals. This personal advice service# can cover your entire financial situation including guidance and solutions on a range of topics such as retirement planning, transitioning to retirement and wealth creation advice outside of your super.

Financial advice is provided by ESI Financial Services Pty Ltd (ABN 93 101 428 782) (AFSL 224952) (‘ESIFS’), a wholly owned entity of LGIAsuper (ABN 23 053 121 564) (RSE R1000160). LGIAsuper Trustee (ABN 94 085 088 484) (AFSL 230511) as trustee for LGIAsuper.. The financial advice you receive from the Financial Advice Team will be provided under the Australian Financial Services Licence held by ESIFS (AFSL 224952) and therefore is not the responsibility of LGIAsuper.