- 1 Pay off cards and personal loans No investment reliably beats their rates.
- 2 Build an emergency fund Ideally in an offset account.
- 3 Salary sacrifice into super Taxed at 15%, if you won’t need it before retirement.
- 4 Invest outside super ETFs or shares, for goals before retirement.
Inside super
| Contribution | Tax | 2026–27 cap |
|---|---|---|
| Concessional (your employer’s super, salary sacrifice, personal contributions you claim) | 15% going in | $32,500 a year, plus unused cap from the last 5 years if your balance is under $500,000 |
| Non-concessional (from after-tax money) | None going in | $130,000 a year, or more by bringing forward later years’ caps |
The big advantage is the tax going in. Take $10,000 of your salary as pay at a 32% tax rate and you have $6,800 to invest. Sacrifice it into super and $8,500 goes in:
- 17% tax rate with the levy $200 more in super
- $8,300 $8,500
- 32% tax rate with the levy $1,700 more in super
- $6,800 $8,500
- 39% tax rate with the levy $2,400 more in super
- $6,100 $8,500
- 47% tax rate with the levy $3,200 more in super
- $5,300 $8,500
Salary sacrifice is taxed at 15% in your fund, or 30% if your income plus super contributions is over $250,000. On incomes up to $37,000, the low income super tax offset refunds up to $500 of it. Super is locked away until you retire, usually from 60.
Earnings in super are taxed at up to 15%, or 10% on gains from assets held over a year, and withdrawals from age 60 are tax-free. But the money is locked away until you retire, apart from the First Home Super Saver scheme, which can release up to $50,000 of voluntary contributions for a first home deposit. See salary sacrificing into super.
Outside super
ETFs and shares can be sold any time. Dividends are taxed at your marginal rate, with franking credits for tax the company has already paid. Gains are taxed when you sell, with a 50% discount on assets held over a year. The May 2026 Budget announced a change to that discount from 1 July 2027: see capital gains tax explained.
Investing outside super suits goals before retirement: a home deposit more than five years away, a career break, or retiring before 60. Low-cost index ETFs are a simple way to start: see index funds vs stock picking.
Your home loan
Money in an offset account saves interest at your home loan rate, tax-free and with no risk. At 6%, that’s like earning about 9% before tax on the 32% tax rate. Few investments beat that reliably, and you can take the money out again whenever you need it.
Which order
- Pay off credit cards and personal loans.
- Build an emergency fund, ideally in an offset account.
- Salary sacrifice into super if you’re on a 30% or higher tax rate and won’t need the money until retirement. On the 15% rate the gain is small, though if you earn $37,000 or less the low income super tax offset refunds up to $500 of the contributions tax.
- Invest outside super for goals before retirement.
The super calculator shows what extra contributions could grow to.