Superannuation is basically Australia's way of setting up funds for retirement. Aussies have to chip in 12% of their salary into super funds through their employers. They can also throw in some extra cash on their own if they want. These superfunds charge member fees to invest money, and members can only cash out when they hit their 60s.
The cool thing is, I can put up to $30,000 a year into super, and it's considered a concessional super contribution, which means it gets a favourable tax treatment.
I save on taxes when I make extra concessional super contributions, which I can then claim as a tax deduction. It's pretty straightforward: pay into the super fund, let them know I plan to claim a tax deduction, and then give the info to my accountant to get that deduction.
Depending on my income and tax rate, if I'm earning $45,000, I could save up to $4,469 at the 18% marginal tax rate by maxing out the concessional contribution cap of $30,000. On the other hand, if I'm earning $250,000, I could save 47% for each dollar contributed, but it's capped at $588 since there's not much unused concessional contribution left after my employer's contribution.
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