How much tax you pay on your super depends on several factors, including:
- your total super balance
- your age
- the type of contribution or withdrawal you make
If you inherit someone’s super after they die, the super fund pays you a super death benefit. Depending on your circumstances, part of this benefit may be taxed.
Because tax outcomes vary from person to person, it’s always a good idea to seek advice. You can contact the Australian Taxation Office (ATO) or speak with us.
How super contributions are taxed
Money paid into your super by your employer is generally taxed at 15%. This also applies to salary‑sacrificed contributions, which are known as concessional contributions.
There are some exceptions:
- If you earn $37,000 or less, the tax paid on these contributions may be refunded into your super account through the low‑income super tax offset.
- If your combined income and super contributions exceed $250,000, Division 293 tax applies, which is an additional 15% tax.
Contributions made from after‑tax income, known as non‑concessional contributions, are not subject to contributions tax.
Smart tip: To avoid paying extra tax on your super, make sure your super fund has your Tax File Number.
How super investment earnings are taxed
Investment earnings within a super fund are generally taxed at 15%. This includes interest and dividends, after allowing for any tax deductions or credits.
How super withdrawals are taxed
The tax treatment of super withdrawals depends on how you take the money and your age.
Super can be withdrawn as either:
- a super income stream, or
- a lump sum
Because super withdrawals can have long‑term tax and retirement implications, it’s important to make informed decisions. We recommend speaking with us before accessing your super.
Super income stream
A super income stream provides regular payments over time.
- If you are aged 60 or over, income streams are usually tax‑free.
- If you are under 60, some tax may be payable.
Lump sum withdrawals
If you are aged 60 or over and withdraw a lump sum:
- Withdrawals from a taxed super fund are tax‑free.
- Withdrawals from an untaxed fund, such as certain public sector funds, may be taxed.
If you are under age 60:
- You can withdraw up to the low‑rate cap, currently $260,000, tax‑free.
- Amounts above this cap are taxed at 17% (including the Medicare levy) or your marginal tax rate, whichever is lower.
If you have not yet reached your preservation age:
- Withdrawals are taxed at 22% (including the Medicare levy) or your marginal tax rate, whichever is lower.
When someone dies
When a person dies, their super is usually paid to their beneficiary as a super death benefit.
The amount of tax payable depends on:
whether the benefit is taken as a lump sum or an income stream
the taxable and tax‑free components of the super
whether the beneficiary is considered a dependant for tax purposes
Information contained in this document is considered to be true and correct at time of publication. In addition, the information provided is general information only, and does not take into account any individuals’ objectives, financial situation and needs. Before acting on any information contained herein, you should consider the appropriateness of the advice having regard to your personal objectives, financial situation and needs.
