By exploring the following topics and learning more about the tax advantages of super, you will be better equipped to make your retirement savings as tax effective as possible.
As the tax rules can be complex it may be a good idea to seek professional advice before making a decision.
AustralianSuper members have access to no commission, fee-for-service financial advice through Industry Fund Financial Planning.
For more information on tax, visit the Australian Taxation Office (ATO ) website or call their superannuation info line on 13 10 20.
Do we have your Tax File Number?
Do we have your Tax File Number (TFN)? If not, tax will apply at 46.5% (currently 15%) where the total of your concessional contributions (Superannuation Guarantee, salary sacrifice and other employer contributions) is greater than $1,000 and a TFN has not been quoted. The $1,000 threshold will not apply to accounts opened on or after 1 July 2007.
Please note: if we don't have your TFN, we will not be able to accept after-tax (voluntary) payments from you. This means you could miss out on receiving the Government co-contribution.
Update your TFN online now...
How superannuation is taxed
Your superannuation is subject to the following Government taxes:
Tax may also be applied on the withdrawal of your benefit in cash, depending on your age, the amount of your benefit and its different components.
For more detailed information on the above, download the How is super taxed? fact sheet.
What is the cap?
Concessional contributions
Individuals can make Concessional contributions of up to $25,000 per year. All Concessional Contributions that exceed this limit will be taxed at the highest rate of 46.5%.
However, members aged 50 years or over are entitled to a higher limit of $50,000 pa until 1 July 2012, when the limit will decrease further to $25,000 for all members regardless of age. If you exceed this limit the contributions will be taxed at the highest marginal tax rate of 46.5%.
These contributions are limited to $150,000 per person per year or $450,000 over three years for members under age 65. Excess contributions are taxed at 46.5%.
Non-concessional contributions
Non-concessional contributions, that is after-tax contributions, are not taxed when paid into super because they’ve already been subject to income tax.
These contributions are limited to $150,000 per person per year or $450,000 over three years for members under age 65. Excess contributions are taxed at 46.5%.
Spouse rebates
You may qualify for a tax rebate if you make contributions to superannuation on behalf of your spouse and your spouse earns less than $13,800 per year.
The rebate applies to contributions of up to $3,000 each year to a spouse account. The maximum rebate is $540 and this applies if your spouse earns $10,800 or less. If your spouse earns more than this the rebate will be lower.
A contribution to a spouse account is treated as a personal contribution and is not taxed.
To qualify for a spouse rebate you and your spouse will need to satisfy certain conditions set by the Government:
- Your spouse must be under age 65, or aged between 65 and 70 and have worked at least 40 hours in any 30-day period during the financial year
- Your spouse (legal or de facto partner, but not same-sex partner) must live with you on a permanent basis
- Your spouse must not be your employee
- You must be in receipt of assessable income (otherwise you have no tax to apply the rebate)
- You must supply your spouses Tax File Number.
There is an annual limit of $150,000 p.a. (or $450,000 averaged over 3-years if you are under age 65) that applies to all voluntary (which includes spouse) contributions.
As an AustralianSuper member, you can use our AustralianSuper Personal Plan to open a spouse account.
Tax deductions for self-employed
If you are self-employed, you can claim a full deduction for contributions up to $50,000 (or $100,000 if aged 50 or over) made into super until age 75, and you may also be eligible for the Government Co-contribution scheme.
If this applies to you
You will need to advise your superannuation fund each year of the amount you intend to claim as a tax deduction. This needs to be done by submitting a notice in accordance with Section 290-170 of the Income Tax Assessment Act.
To obtain a copy of this notice, just call AustralianSuper weekdays from 8am-8pm (EST).
When you have returned the completed notice, your superannuation fund will send you an acknowledgement in writing for you to keep with your tax records.