You can invest in your super before you pay tax on your income (concessional contributions) or from your after tax income (non-concessional).
In most cases, if you are working, it is best to invest pre-tax as income tax rates are currently as high as 49% (including Medicare and budget repair levies) whereas the contributions tax you pay when investing into super is only 15%.
As an example, if you are earning $90,000 your marginal rate of tax is 37%, plus the Medicare levy of 2%. If you were to ‘sacrifice’ $10,000 of salary to super you would reduce the tax and Medicare levy you pay by $3,900. You do pay contributions tax of 15% going into super so in this example the tax you pay is $1,500 instead of $3,900, saving you $2,400.
There are a number of strategies to help you save tax and maximise your super, some are particularly useful as you get closer to retirement. However as with all good things there are limits to how much you can contribute.
If you have a very high or very low income there are other factors to consider, but in all cases it is worth having a chat to a financial planner to see how to maximise the benefits you receive.