How superannuation is taxed
Under current tax laws, superannuation may be taxed at three points:
Tax on employer contributions
A 15% tax applies to employer contributions and any contributions you make to your superannuation by salary sacrifice (i.e. from your before-tax salary). This is referred to as a contributions tax.
The contributions tax does not apply to contributions you make to superannuation out of your after-tax salary, as the funds used will already have been subject to income tax.
Limits apply to the amount of before and after-tax contributions you can make to super. Learn more ...
Tax on investment earnings
A tax of up to 15% applies to investment earnings from your super. For most people this is lower than the tax they would pay on earnings from non-super investments, which are taxed at personal income tax rates of up to 46.5%.
Your superannuation fund pays tax on investment earnings before allocating net earnings as interest to your account.
Tax on withdrawals
The tax on withdrawals depends on several factors:
- Your age
- The type and amount of benefit paid
- Your assessable income
- How much of your benefit relates to employment completed before or after 30 June 1983.
Superannuation withdrawal benefits paid in cash from AustralianSuper will generally be tax-free for those aged 60 or over.
Pre - 1 July 1983 component
The portion of your superannuation benefit that relates to employment before 1 July 1983. This figure has been calculated as a fixed dollar amount as at 30 June 2007. This now forms part of the exempt (tax-free) component and therefore this portion of your benefit is tax free.
Post - 30 June 1983 component
The portion of your benefit that relates to employment service after 30 June 1983 and forms part of the taxable component if you take a superannuation benefit before age 60.
Spouse rebate
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 are also 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.