Why tax matters for retirement planning
It’s important to understand how tax on super works both before and during retirement. If you're looking to increase your balance before retirement, reduce your taxable income, or start drawing an income from super, knowing the tax rules can help you help you make the most of your retirement savings.
Super is designed to be a tax-effective way to save for retirement. Making additional contributions to your super may help reduce your taxable income and increase your retirement savings over time1. If you're approaching retirement, there may be opportunities take advantage of potential tax benefits before you stop working.
Tax on contributions
There are different ways to add money to your super, and the tax treatment can vary depending on how you contribute. Super Guarantee (SG) contributions that your employer makes are generally taxed at a concessional rate of 15% when they are paid into your super account.
You may be able to make before-tax contributions through salary sacrifice2 or by claiming a tax deduction for eligible personal contributions such as from your take home pay.
The contribution options available to you, and any tax benefits that may apply, depend on factors such as your age, eligibility, contribution caps and individual circumstances.
Understanding tax on super income
Once you start receiving an income from your super, it's important to understand how tax may affect your payments and retirement savings.
Tax on super while you're still working
If you’re 60 to 64 years and still working, you may be able to access a regular income from your super by opening a Transition to Retirement (TTR) Income account3. Income payments from this account are not taxed. However, it’s important to note that investment earnings on super in a TTR Income account will generally attract 15% tax until you retire, tell your super fund you've stopped working for an employer, or turn 65.
Tax on super after you've retired
Once you’re retired, you can choose to move some or all of your super into a account-based pension, like Choice Income.
From age 60, income payments and lump sum withdrawals from retirement income accounts, such as a Choice Income account, are also tax free.
About the transfer balance cap
Keep in mind, there's a limit to the amount of super you can transfer into a tax-free retirement income like a Choice Income account. This is known as the transfer balance cap, and in general the cap is $2.1 million4.
Helpful links
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Disclaimers
- Before adding to your super, consider your financial circumstances, eligibility, contribution caps that may apply, tax issues and when your super can be accessed. We recommend you consider seeking financial advice.
- Salary sacrifice may affect some Government benefits and employee benefits. We recommend you consider seeking financial advice before deciding if a salary sacrifice arrangement is right for you.
- Transition to Retirement (TTR) can be complex and isn’t suited to everyone. It’s a good idea to get financial advice before deciding if a TTR Income account is right for you.
- The government has set a lifetime limit on the amount of super you can transfer into any tax-free retirement income account(s), called the Transfer Balance Cap. From 1 July 2026, the limit is $2.1 million. If you had a retirement income account prior to this date, you may have a personal transfer balance cap between $1.6 million to $2.1 million. For more information please visit the ato.gov.au
- Personal advice is given by a separate legal entity, not by AustralianSuper Pty Ltd. Some personal advice may incur a fee, which will be disclosed before any work is completed. Subject to meeting eligibility criteria, fees for advice about your AustralianSuper account may be deducted from your account with your consent.