If you have some spare cash, you may be wondering whether to put more into super or use it to reduce your mortgage. There isn’t one answer that suits everyone. Your tax position, mortgage, access to your money, retirement timeframe and super contribution limits can all matter. This article is general information only. It is not a recommendation about what you should do.
The tax side
A concessional contribution is generally a before-tax contribution to super. It can include employer contributions and salary sacrifice.
The concessional contributions cap is $32,500 for the 2026-27 financial year. Your employer’s compulsory super contributions count towards this cap.
If you have unused concessional contribution amounts from previous years, you may be able to carry them forward. Generally, you can use unused amounts from up to five previous financial years if your total super balance was less than $500,000 at 30 June of the previous financial year.
Higher-income earners may also need to consider Division 293 tax. This is an additional tax that can apply to concessional super contributions where your income and contributions are above the relevant threshold.
Access to your money
Super is designed for retirement, so access is restricted until you meet a condition of release.
Your preservation age is between 55 and 60, depending on when you were born. Reaching preservation age on its own does not necessarily mean you can access your super. You also generally need to meet a condition of release.
A mortgage is different. Paying down a home loan reduces the amount of debt on which your lender charges interest. If you have an offset account, the money can remain accessible while reducing the balance on which interest is calculated, subject to your loan terms.
Your timeframe matters
The amount of time until retirement can be an important consideration. So can your mortgage interest rate, the amount you already have in super, your income and when you may need access to your money.
Super investments can rise and fall in value. A mortgage, on the other hand, has a known interest cost under the terms of your loan. These are different financial considerations, which is why there isn’t a simple rule that applies to everyone.
Where we can help
We can explain the tax implications of super contributions and your mortgage. However, deciding whether you should contribute more to super, reduce your mortgage or use another strategy is personal financial advice. For personal advice about superannuation or investments, you should speak with a licensed financial adviser.
Our invitation
If you’d like to understand the tax side of your options, please get in touch with us on (07) 3385 0686.
Sources
- Australian Taxation Office – Caps, limits and tax on super contributions (ato.gov.au)
- Australian Taxation Office – Division 293 tax (ato.gov.au)
- Moneysmart – Tax and super (moneysmart.gov.au)
- Moneysmart – Mortgage offset accounts (moneysmart.gov.au)
- Moneysmart – Prepare to retire (moneysmart.gov.au)
This article is general information only. It doesn’t take into account your personal circumstances and isn’t financial product advice. Please speak with us before acting on anything here.
