Meet Sarah, a 45 year old marketing manager earning $120,000 annually.

Here’s how she optimised her super contributions to reduce her tax bill while boosting her retirement savings.

Why this case study matters:
It shows how middle income earners can legally redirect tax dollars into retirement savings – a strategy often overlooked outside high net worth circles.

Sarah’s financial snapshot (2024–25)

• Taxable income: $120,000
• Marginal tax rate: 34.5% (including 2% Medicare levy)
• Current super balance: $280,000
• Goal: Reduce taxable income while maximising retirement savings

The strategy – Concessional contributions
Sarah decided to contribute $50,000 to her superannuation using a combination of:

1. Salary sacrifice
   $30,000 (current year’s concessional cap)
2. Carry forward contributions
   $20,000 (unused caps from 2020–21 and 2021–22)

Why this works:

• Tax on contributions
  15% (instead of her 34.5% marginal rate)
• Taxable income reduction
  From $120,000 to $70,000

Tax savings breakdown

Calculation highlights:

• Income tax saved: $16,000 ($29,188 → $13,188)
• Super tax paid: $7,500 (15% of $50,000)
• Net benefit: $16,000 − $7,500 = $8,500

Long term impact

1. Super growth
   Assuming 7% annual returns, Sarah’s $50,000 could grow to $193,484 by age 67.
2. Retirement flexibility
   Lower taxable income also reduced her Division 293 tax risk (no additional 15% on contributions).

Why this works for Sarah

• Carry forward rule eligibility
  Her super balance ($280k) was below the $500k threshold.
• Tax arbitrage
  Converting 34.5% marginal tax into 15% super tax.
• Compound growth
  Super’s concessional earnings tax (15%) vs personal investments (up to 47%).

Key considerations

• Timing
  Contributions must be received by your fund before 30 June.
• Excess contributions
  Sarah stayed within her $50k limit (using carry forward rules).
• Alternative options
  Non-concessional contributions could have been used, but without the upfront tax deduction.

Tip
Always check your MyGov account for unused concessional caps before EOFY. For balances under $500k, this is free money on the table.


Next steps
If you earn between $100k – $250k, concessional contributions can be a powerful tax saving tool. Use the ATO’s carry forward calculator or book a consultation with us to model your scenario.

You must consider your own financial circumstances, needs and objectives to ensure this strategy is suitable for you.

We recommend that you seek personal advice from a qualified Financial Planner.