Reduce Your Capital Gains Tax and Boost Your Super: An Opportunity

Reduce Your Capital Gains Tax and Boost Your Super: An Opportunity

Have you recently sold an asset — like an investment property or a share portfolio — and triggered a sizeable capital gain? If so, there’s a valuable opportunity to manage your tax bill and grow your retirement savings at the same time.

By making a personal contribution to superannuation, you may be eligible to claim a tax deduction, which reduces your taxable income for the year. This simple strategy can result in significant savings — especially if you’re on a higher income — while helping you build wealth inside the concessionally taxed super system.

What Are Concessional Contributions?

Concessional contributions are pre-tax contributions made into your super. They include:

·         Employer Super Guarantee (SG) contributions

·         Salary sacrifice contributions

·         Personal contributions where you claim a tax deduction

·         Once claimed as a deduction, these contributions are taxed at just 15% inside super, compared to your marginal tax rate, which could be as high as 47%. That’s a potential tax saving of up to 32 cents per dollar contributed.

High-income earners:

·         If your total income plus concessional contributions exceeds $250,000 in a year, an additional 15% tax (Division 293 tax) may apply. Even then, a total tax rate of 30% is still well below the top marginal rate.

A Quick Note for Older Contributors:

·         If you’re aged 67 to 75 and want to claim a deduction for your personal contribution, you’ll need to satisfy the work test (40 hours of gainful employment in a 30-day period) — or be eligible for the work test exemption.

Contribution Limits & Carry-Forward Rules

·         For the 2025–2026 financial year, the concessional contributions cap is $30,000.

·         However, if you haven’t fully used your concessional cap in past years, you may be able to carry forward the unused amounts — up to five years — as long as your total super balance is under $500,000 at 30 June of the previous financial year.

·         This strategy can allow for larger one-off deductible contributions, such as when you’ve made a large capital gain and want to offset the tax.

Case Study: How Jon Saved $16,000 in Tax

Let’s look at a real-world example..

·         Jon, aged 57, recently sold an investment property, resulting in a $100,000 capital gain. Combined with his employment income, his total assessable income for the year is $240,000.

·         Jon’s super balance is $400,000, and over the past five years, he hasn’t always used his full concessional cap:

Jon’s Super Strategy:

·         Jon contributes $50,000 from the proceeds of his property sale into super.

·         $30,000 is his standard concessional cap for 2025–26

·         $20,000 is unused cap carried forward from the past five years

·         Total deductible contribution available: $50,000

·         Instead of being taxed at his marginal rate of 47%, Jon’s $50,000 is taxed at just 15%, saving him: $16,000 in tax

Next Steps:

·         If you’ve had a capital gain this year and want to reduce your tax while maximizing your super, now’s the time to act.

·         Speak with your financial adviser to check your eligibility and assess how much unused concessional cap space may be available to you. The right strategy could make a major difference to both your retirement savings and your tax bill.

General advice disclaimer General Advice warning: the information in this article is general in nature, it is not advice specific to your needs. If you want to act upon the information in this article then you should seek advice from a qualified professional. VJC and VJC WM accepts no liability to any party for acting from this information unless they have sought advice in a formal engagement for this purpose