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Home / How super works / Super rules

Key superannuation rates and thresholds for 2020/21

June 29, 2020 by Barbara Drury Leave a Comment

Reading time: 7 minutes

On this page

  • Concessional contributions cap
  • Non-concessional contributions cap
  • Superannuation guarantee (SG)
  • Division 293 tax
  • Super co-contribution
  • Tax offset for super contributions on behalf of your spouse
  • Low-income super tax offset (LISTO)
  • Downsizer contribution to super
  • First Home Super Saver Scheme (FHSSS)
  • Capital gains tax (CGT) cap
  • Low-rate cap
  • Untaxed plan cap
  • Minimum pension payments
  • Preservation age
  • Tax on super lump sums
  • Transfer balance cap
  • Income tax rates, levies and offsets
  • Age Pension rates and thresholds

Superannuation is widely regarded as the most tax-effective vehicle for retirement savings, but tax effective is far from tax simple.

In this article, we summarise the eye-glazing range of tax rates and thresholds that can affect the amount of tax you pay on your super savings both in the accumulation phase (while you are working) and retirement phase (when you withdraw your money).

Concessional contributions cap

Concessional contributions are before-tax contributions made into your super fund from a number of potential sources. They may come from your employer (such as the 9.5% superannuation guarantee), salary-sacrifice arrangements with your employer or tax-deductible personal contributions. These contributions are taxed at 15% as they enter your super fund. (High income earners may pay more – see Division 293 tax below).

The concessional contributions cap is a limit on the amount of pre-tax contributions you can make in a financial year. Any contributions above this cap will incur additional tax. The concessional contributions cap for 2020/21 is $25,000.

However, under the new carry-forward rule you may be able to exceed the annual limit. If you have a total super balance of less than $500,000 you can accumulate any unused portion of the current $25,000 concessional contributions cap for up to five years and use this to make additional super contributions.

If you exceed the current $25,000 cap (and you aren’t eligible to use the carry-forward rule), your excess contributions are added to your taxable income and you’ll pay tax on them at your marginal rate.


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You’ll also be charged an excess concessional contributions (ECC) charge based on your additional tax liability plus compound interest. The ECC charge rate is adjusted each quarter to reflect market conditions and was 3.89% for the 2020 June quarter.

Learn more about concessional contributions.

Non-concessional contributions cap

Any contributions you make to your super fund from your after-tax income are called non-concessional contributions. The annual non-concessional contributions cap for the 2020/21 financial year is $100,000.

If you’re aged under 65, you can bring forward up to $300,000 of non-concessional contributions in any three-year period.

However, if you’re aged between 65 and 74 you can still make voluntary super contributions in the first year after you retire without satisfying the work test, provided you have less than $300,000 in your super account at the end of the previous financial year.

Learn more about non-concessional contributions.

Superannuation guarantee (SG)

The superannuation guarantee is the official term for compulsory super contributions made by employers on behalf of their employees.

The superannuation guarantee amount is currently 9.5% of an employee’s ordinary time wages or salary. This rate is scheduled to progressively increase to 12% by July 2025, as outlined in the table below.

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Financial yearSuper guarantee rate
1 July 2021 – 30 June 202210%
1 July 2022 – 30 June 202310.5%
1 July 2023 – 30 June 202411%
1 July 2024 – 30 June 202511.5%
1 July 2025 – 30 June 202612%

Source: Australian Taxation Office

To ensure the superannuation system is fair, the government also places a limit on SG payments by an employer on behalf of an employee. This is known as the maximum superannuation contribution base. An employer doesn’t have to pay the superannuation guarantee on employee earnings above this base limit, currently set at $57,090 for the 2020/21 financial year.

Learn more about the superannuation guarantee.

Division 293 tax

If your combined income and concessional super contributions exceed $250,000 you pay an additional 15% tax on concessional contributions, known as Division 293 tax. This tax is levied on the excess over the $250,000 threshold, or on your super contributions, whichever is less.

Learn more about Division 293 tax.

Super co-contribution

In order to encourage low- to middle-income earners to boost their retirement savings, the government offers a super co-contribution. If your annual income is below the lower income threshold outlined in the table below, the government will match any (after-tax) super contributions you make during the financial year up to a maximum co-contribution of $500. The co-contribution phases out once your income reaches the upper threshold.

Financial yearMaximum co-contribution entitlementLower income thresholdHigher income threshold
2020/21$500$38,837$54,837

Source: Australian Taxation Office

You don’t have to apply to the ATO for the super co-contribution. If you’re eligible, it will be paid to your super fund automatically.

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Learn more about the super co-contribution.

Tax offset for super contributions on behalf of your spouse

If your (married or de facto) spouse is earning a low income or not working and you make contributions to their super on their behalf, you may be eligible for a tax offset of $540 a year, provided you meet the following criteria:

  • The combined total of your spouse’s assessable income, reportable employer super contributions and total reportable fringe benefits is less than $37,000. (You’ll be entitled to a partial tax offset if your spouse earns between $37,000 and $40,000.)
  • Both you and your spouse must have been Australian residents and living together when the contributions were made.
  • Your spouse must not have exceeded their non-concessional contributions cap for the financial year, nor exceeded their transfer balance cap.

From 1 July 2020, the age limit for the spouse receiving the super contributions increased from 69 to 74, provided they meet the work test from age 67.

Learn more about the tax offset for super contributions you make on behalf of your spouse.

Low-income super tax offset (LISTO)

The low-income superannuation tax offset (LISTO) was formerly known as the low-income superannuation contribution (LISC). It’s designed to ensure low-income earners don’t pay more tax on their super contributions than they do on their take-home pay.

Eligible low-income earners with an adjusted taxable income of $37,000 or less receive a LISTO contribution to their super fund of 15% of their total concessional super contributions, capped at $500. (Adjusted taxable income includes taxable income plus any tax offsets for dependants and any government benefits received.)

You don’t have to apply to the ATO for the LISTO. If you’re eligible, it will be paid to your super fund automatically.

Learn more about LISTO.

Downsizer contribution to super

Older Australians who want to downsize their family home to free up cash for their retirement can put some of the sale proceeds into their super. You can make a downsizer contribution of up to $300,000 ($600,000 for couples) into your super provided that:


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  • You’re over the age of 65
  • You (or your spouse) owned your home for at least 10 years
  • You make the contributions within 90 days of receiving the sale proceeds
  • You complete a Downsizer contribution into super form that’s available from the ATO’s website.

It’s important to understand that you can only make a downsizer contribution from the sale of one home. Downsizer contributions are not classed as concessional or non-concessional contributions and therefore are not included in your annual contributions caps.

However, they do count towards your transfer balance cap. This is the amount you can transfer from your accumulation account into your retirement account, which is currently $1.6 million.

Downsizer contributions are not tax deductible and are included in determining your eligibility for the Age Pension.

Learn more about downsizer contributions.

First Home Super Saver Scheme (FHSSS)

The FHSSS allows first home buyers to save towards a deposit in the tax-advantaged superannuation environment.

You can voluntarily contribute up to $15,000 in a financial year and then access these funds early for a deposit on your first home, up to a maximum of $30,000. Any FHSSS contributions must be within your annual concessional and non-concessional caps.

Learn more about the FHSSS.

Capital gains tax (CGT) cap

The CGT cap allows small business owners to make non-concessional super contributions from the sale of business assets without them counting towards their non-concessional contributions cap, up to a lifetime limit.

The lifetime CGT cap amount is $1,565,000 for the 2020/21 financial year.

Learn more about the capital gains tax (CGT) cap.

Low-rate cap

If you reach your preservation age and withdraw super before turning 60, you pay tax on the taxable components of your payments. The low-rate cap is a limit on the amount that can be taxed at the concessional super rate of 15%.

The low-rate cap amount for the 2020/21 financial year is $215,000.

Learn more about the low-rate cap.

Untaxed plan cap

The untaxed plan cap applies to members of defined benefits super funds who have not been subject to the 15% contributions tax. The cap limits the concessional tax treatment of these benefits.

The untaxed plan cap amount for the 2020/21 financial year is $1,565,000.

Minimum pension payments

When you retire and start living off your superannuation savings in a super pension or annuity, a minimum amount must be withdrawn each financial year. The payment rate is a percentage of your account balance and depends on your age, as shown in the following table.

Note

On 22 March 2020 the federal government announced that the minimum pension drawdown rates would be halved for the 2019/20 and 2020/21 financial years. The rates below show the temporary rates for 2019/20 and 2020/21, and the normal rates for preceding years.

Age of beneficiaryTemporary percentage factor
(2019/20 and 2020/21)
Normal percentage factor
(2013/14 to 2018/19)
Under 652%4%
65 to 742.5%5%
75 to 793%6%
80 to 843.5%7%
85 to 894.5%9%
90 to 945.5%11%
95 or more7%14%

Source: SIS Act

There is no maximum pension payment. You can withdraw a lump sum or receive the balance of your super account if you choose, unless it is a transition-to-retirement pension that is not in the retirement phase. In that case, you are limited to receiving a maximum of 10% of your account balance each year.

Learn more about minimum pension payments.

Preservation age

Your superannuation is ‘preserved’– that is, it can’t be touched – until you reach your preservation age. This is the minimum age that you can legally withdraw your super benefits, once you have met a condition of release.

Your preservation age depends on your date of birth, as indicated in the table below.

Date of birthPreservation age
Before 1 July 196055
1 July 1960 – 30 June 196156
1 July 1961 – 30 June 196257
1 July 1962 – 30 June 196358
1 July 1963 – 30 June 196459
From 1 July 196460

Learn more about your preservation age.

Source: Australian Taxation Office

Tax on super lump sums

If you receive a lump sum payment from your super, you may or may not pay tax, depending on various factors summarised in the table below.

Lump sum componentAge when lump sum receivedAmount subject to taxMaximum rate of tax (excluding Medicare levy)
Member benefit with a taxable component – the taxed elementUnder the preservation ageThe whole amount20%
At or above preservation age but under the age of 60Up to the low rate cap amountNil
Above the low rate cap amount15%
Over the age of 60NilN/A
Member benefit with a taxable component – the untaxed elementUnder the preservation ageUp to the untaxed plan cap amount30%
Above the untaxed plan cap amount45%
At or above preservation age but under the age of 60Up to the low rate cap amount15%
Above the low rate cap amount and up to the untaxed plan cap amount30%
Above the untaxed plan cap amount45%
Over the age of 60Up to the untaxed plan cap amount15%
Above the untaxed plan cap amount45%
Death benefit lump sum paid to non-dependants with a taxable component – taxed elementAnyThe whole amount15%
Death benefit lump sum paid to non-dependants with a taxable component – the untaxed elementAnyThe whole amount30%
Death benefit lump sum paid to dependants with a taxable component – taxed and untaxed elementsAnyNilN/A
Rollover super benefits with a taxable component – the taxed elementAnyNilN/A
Rollover super benefits with a taxable component – the untaxed elementAnyNil up to the untaxed plan cap amountN/A
AnyAbove the untaxed plan cap amount45%
Super lump sum benefits less than $200AnyNilN/A
Super lump sum benefits for terminally ill recipientsAnyNilN/A

Source: Australian Taxation Office

Learn more about super lump sum payments.

Transfer balance cap

When you retire and shift your super into the tax-free retirement phase of your super fund from your accumulation account, there is a cap on the maximum amount you can transfer. The current transfer balance cap is $1.6 million.

Learn more about the transfer balance cap.

Income tax rates, levies and offsets

Information on Australia’s current income tax rates, levies and offsets, including those affecting retirees, is available below:

  • Income tax: Australian tax brackets and rates (2020/21)
  • Guide to the Low and Middle Income Tax Offset (LMITO)
  • Guide to the Low Income Tax Offset (LITO)
  • Personal income tax cuts (2018–2025): What it means for you
  • How does SAPTO work? (Senior Australians and Pensioners Tax Offset)

Age Pension rates and thresholds

  • Discover the current Age Pension rates
  • Learn about the Age Pension income test limits
  • Learn about the Age Pension assets test limits

The information contained in this article is general in nature.

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Learn more about the super rules in the following SuperGuide articles:

Superannuation rule changes: Your guide for 2020/21

June 30, 2020

In your 70s? The super rules that apply to you

May 1, 2020

In your 60s? The super rules that apply to you

May 1, 2020

In your 50s? The super rules that apply to you

May 1, 2020

In your 20s, 30s or 40s? The super rules that apply to you

May 1, 2020

In your teens? The super rules that apply to you

May 1, 2020

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