For Australians serious about building a comfortable retirement, after-tax (non-concessional) contributions have become an essential part of the superannuation toolkit. With policy tweaks and inflation adjustments coming into play for the 2024–25 financial year, now is the time to understand how these contributions work—and how you can make the most of them.
What Are After-Tax Contributions?
After-tax contributions are payments you make into your super fund from income that’s already been taxed (like your salary, savings, or proceeds from selling an asset). Unlike concessional (pre-tax) contributions, these do not incur the 15% contributions tax when entering your fund. Instead, your super fund invests the full amount on your behalf, and future earnings are taxed at the concessional super rate.
Key points for 2025:
- The annual non-concessional cap is $110,000, but up to $330,000 can be contributed over three years using the bring-forward rule (provided you’re under 75 and meet other eligibility criteria).
- These contributions don’t reduce your taxable income, but they can be a powerful way to rapidly boost your super balance if you’ve received an inheritance, bonus, or cashed-out investment.
- As of July 1, 2024, your total super balance must be below $1.9 million on June 30 of the previous financial year to make further after-tax contributions.
Why Consider After-Tax Contributions in 2025?
With inflation pushing up living costs, more Australians are reassessing how much they’ll need in retirement. After-tax contributions offer a unique set of benefits:
- Tax-effective growth: Investment earnings in super are taxed at 15%, often lower than your marginal tax rate outside super.
- Flexible estate planning: Non-concessional contributions can help you leave a larger, tax-advantaged legacy for your beneficiaries.
- Access to government co-contributions: If your annual income is under $58,445 (for 2024–25), the government may match your after-tax contributions up to $500 if you meet eligibility rules.
For example, a 52-year-old who receives a $200,000 inheritance could use the bring-forward rule to contribute the entire amount to super in one go, ensuring all future investment growth is taxed at the concessional rate inside super rather than their personal marginal rate.
2025 Policy Changes and What They Mean for You
Recent policy updates are worth noting for anyone eyeing a lump-sum contribution:
- Indexation of caps: While the annual $110,000 cap remains unchanged for 2025, the total super balance threshold has increased to $1.9 million. This means more Australians are eligible to make after-tax contributions.
- Downsizer contributions: Separate from non-concessional contributions, the downsizer scheme lets eligible Australians aged 55+ contribute up to $300,000 from the sale of their home—without affecting their after-tax cap.
- Work test changes: Since July 2022, the work test no longer applies for non-concessional contributions up to age 75, giving older Australians more flexibility.
Be mindful: Exceeding your non-concessional cap can result in hefty tax penalties, so track your total contributions carefully—especially if you’re using the bring-forward rule.
Smart Strategies to Maximise Your Super in 2025
- Plan around windfalls: Direct inheritances, bonuses, or asset sales into your super via after-tax contributions to take full advantage of the concessional tax environment.
- Time your contributions: If you’re approaching retirement, consider timing your after-tax contributions to maximise your super balance just before you retire.
- Combine with other strategies: Pair after-tax contributions with concessional (salary-sacrifice) contributions to maximise your overall cap space and tax advantages.
- Check your total super balance: Regularly review your super balance to ensure you remain eligible for non-concessional contributions, especially as the $1.9 million cap is now indexed annually.
With the right strategy, after-tax contributions can be the difference between a basic retirement and a lifestyle with choices.
