Key Takeaways
- Salary sacrifice allows pre-tax contributions to super, reducing taxable income and growing retirement savings faster.
- Non-concessional contributions use after-tax income to boost super without affecting taxable income.
- The best approach depends on income level, contribution caps, tax position, and long-term goals.
- Newcastle families can benefit from combining both strategies under the right circumstances.
Why This Matters for Newcastle Families
What is Salary Sacrifice?
Salary sacrifice is an arrangement with your employer to contribute part of your pre-tax income directly into super. The amount is taxed at 15% (or 30% for incomes above $250,000), which is generally lower than your marginal tax rate.
Advantages of salary sacrifice:
- Reduces your taxable income
- Increases retirement savings efficiently
- Takes advantage of lower super tax rates
Points to watch:
- Subject to the concessional contributions cap ($30,000 for 2025/26, including employer contributions)
- Exceeding the cap may trigger extra tax
- Funds are preserved until you meet a condition of release, such as retirement.
What are Non-concessional Contributions?
Non-concessional contributions are made from your after-tax income. Because the tax has already been paid, no further contributions tax is applied when adding these funds to super.
Advantages:
- Boost super without impacting taxable income
- Use the bring-forward rule to contribute up to $360,000 across three years (if eligible)
- Ideal for lump sums, such as savings or inheritance
Points to watch:
- Subject to the non-concessional contributions cap ($120,000 per year)
- If your total super balance exceeds $2 million (2025/26), you cannot make further non-concessional contributions
Which is Better for Newcastle Families?
The right approach depends on your income, financial goals, and stage of life:
- Salary sacrifice is ideal for higher-income earners wanting to reduce tax and increase retirement savings.
- Non-concessional contributions suit those with spare after-tax cash, such as a bonus or inheritance, who want to grow super without changing take-home pay.
Example: Combining Both Strategies
Case Study: The Harris Family, Newcastle
Sarah earns $120,000 per year, while Michael earns $45,000 part-time. Sarah salary sacrifices $15,000 annually to reduce her taxable income, keeping total concessional contributions within the cap. When they receive a $100,000 inheritance, they contribute it to super as a non-concessional contribution.
This approach reduces their tax bill, accelerates retirement savings, and helps them make the most of available contribution caps.
Local Considerations in Newcastle and the Hunter Region
Property values, lifestyle costs and future retirement plans all influence the right contribution strategy. For example:
- Families planning to downsize from a home in Merewether or Charlestown might combine downsizer contributions with non-concessional contributions.
- Professionals in mining, healthcare, or construction — common in the Hunter Region — may use salary sacrifice in high-income years for tax efficiency.
When to Seek Advice
- Understand eligibility and contribution limits
- Optimise tax outcomes and avoid excess contribution penalties
- Coordinate contributions with overall retirement planning and superannuation strategies
At Intentional Wealth, we work with Newcastle and Hunter Region families to design practical, tax-effective contribution plans that grow your super efficiently.
Final Thoughts
Both salary sacrifice and non-concessional contributions are powerful tools for building your super. The right combination depends on your tax position, income and family goals. With expert advice, you can use both to maximise savings and enjoy a secure retirement.
Book Your Free Super Strategy Consultation
Book your free 30-minute consultation or call (02) 4933 2364 to discuss your super contribution strategy. Explore related services: Superannuation, Wealth Creation & Investing, and Financial Planner Newcastle.
