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Is superannuation taxed?

Yes, your super gets taxed in a few main ways:

  1. Tax on super contributions

  2. Tax on investment earnings

  3. Tax on super withdrawals and retirement income payments

  4. Tax on death benefit payments

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What's contributions tax in superannuation?

When you or your employer add before-tax money to your super account, you pay tax on those super contributions.

Here's a quick look at the tax on super contributions:

* If your income plus before-tax super contributions is over $250,000/year, the ATO may apply an extra 15% to some or all of your contributions.

Super tax is often less than income tax

Contribution tax in superannuation is generally lower than the tax on your pay (employment income).

And super tax rates are often lower than the tax on investment returns outside of super (investment income).

  • Super contributions can reduce your taxable income

  • Super can be a tax-effective way to save for your future

Why am I being charged contribution tax on super?

The Australian tax laws set out if and when you have to pay contribution tax in superannuation.

How to avoid contribution tax

How to avoid contribution tax

Paying tax on super is often unavoidable. But there are some ways to limit how much tax you pay.

  • Give us your tax file number
    Give us your tax file number

    One way to avoid paying extra tax is to add your tax file number (TFN) in Member Online.

    If you don't, you could pay up to 47% tax on the SG contributions from your employer, and any other before-tax super payments (45% + 2% Medicare levy).

    You also can't make voluntary after-tax contributions unless you list your TFN with us.

  • Know the contribution limits
    Know the contribution limits

    There are some limits to how much you can contribute to your super fund each year. You could pay extra tax if you go over these limits.

You might pay less tax on before-tax contributions than on your pay. It depends how much you earn.

Concessional (before-tax) contributions can be:

For example, if you earn over $45,000 a year, the 15% contributions tax could be less than your normal income tax rate (up to 45% + 2% Medicare Levy).

By adding some of your pay to your super before tax, you reduce your taxable income for the year.

If you add money to your super from your take-home pay, you don't pay the super contributions tax. That’s because you’ve already paid tax on it.

Learn more about after-tax super contributions.

If you add extra money to your super as an after-tax contribution, you may be able to claim a tax deduction for it.

Find out how to claim this tax deduction, if you're eligible, and how this changes the tax on your super.

Usually, your super fund and employer will report your super balances and contributions to the ATO. You won’t need to do anything.

In some cases, you may need to declare income, deductions, or tax offsets from super in your return. You can check this with your accountant or tax agent at tax time.

Low-income earners have 2 main tax advantages when adding money to super:

  • If you earn less than $37,000 a year and make or get before-tax contributions, the government refunds the tax on contributions, up to $500. It's called the low income super tax offset (LISTO).
  • If your spouse earns less than $40,000 a year and you make after-tax contributions to their super, you may be able to claim a tax offset of up to $540. It's called a spouse super contribution.

There's also the government co-contribution. If you meet the rules, you can get a bonus for paying into your super after tax.

You can generally access your super tax-free from age 60. If you're ready to plan your retirement, we can help.

Tax on super earnings

Investment earnings in your superannuation account are usually taxed at 15% (or 10% on some capital gains), which is often less than the tax rate of up to 47% on investments outside of super.

This tax is deducted from your investment income by your super fund, so you don’t need to do anything.

When you retire, if you use your super to open a retirement income stream, the investment earnings in that product are tax-free.

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Tax on super withdrawals and income payments

For tax on superannuation withdrawals, how much you pay depends on your age, whether you take the money out as a lump sum or as regular income payments, and whether it's an early withdrawal.

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Taking super out in a lump sum

Withdrawing some or all of your super is called a lump sum. If you're age 60 or over, it's tax-free. If you're under 60, it depends if you're at your preservation age how much tax you pay on the taxable part of your super. Some people also have a part of their super that is tax-free at all ages.

Find out more
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Retirement income payments

If you're 60 or over, you usually don't pay tax when you get an income stream from your super. You can use our Retirement Income account and/or Lifetime Pension to get regular, tax-free income payments from your super, with tax-free investment earnings. If you're under 60, you may pay tax on a super income stream.

Find out more
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Early withdrawal for disability or financial hardship

Financial hardship withdrawals are taxed as a lump sum at up to 22% (including Medicare levy) if you're under 60, and tax-free over 60. For a terminal medical condition, it’s tax-free to withdraw a lump sum within 24 months. For disability payouts, it depends whether you take a lump sum or income payments.

Find out more

Tax on superannuation death benefits you inherit

A death benefit is when you receive someone's super and any insurance they had on their super account. The tax on this money depends on your relationship to the person who died:

If you were a dependant of the person who died (e.g. child, spouse) – under tax law, not superannuation law

If you withdraw it as a lump sum or income stream

The tax-free and taxable parts of the super

Your age

The age of the person when they died (for income streams)

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We're here to help

If someone has recently passed away, please call us on 13 11 84, so we can help you through the process to claim a death benefit.

It's also worth getting financial advice about your inheritance, as the different laws about estates, super, and tax can all be complicated.

What about when you transfer between super funds?

Generally, your super isn't taxed when you transfer from one super fund to another. This is because the money is staying within the super industry.

This includes when you combine your super accounts into one super fund, which is called consolidating.

The exception is that tax may apply if you rollover your super from an untaxed super fund, such as a public sector fund.

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Advice about your super

Your ART membership includes personal financial advice about your accounts with us, so you can make more confident decisions.