Tax on super

Superannuation is the most tax-effective way of saving for your retirement.

The income of super funds is only taxed at 15%, which is below the marginal tax rates that apply to individuals (which range from 19% to 45%, plus the Medicare Levy).

That lower tax rate means your savings benefit more from compound interest – meaning a bigger lump sum when you retire. Some tax may apply when you put money into super, depending on whether a tax deduction has been claimed.

Super earnings

Super fund earnings are taxed at a maximum rate of 15%. The effective tax rate is often lower, due to allowable deductions and certain tax credits.

Limits on contributions

There are limits on how much you can pay into super called Contributions Caps. Different limits apply for after-tax contributions and employer contributions (including salary sacrificed amounts).

Lump sum payments

Super is meant to provide you with income in retirement, so your money is usually not available for withdrawal until retirement. In limited circumstances, you may be able to make a withdrawal before retirement.

Learn more about lump sum payments