Key superannuation rates and thresholds for 2021–22

However, under the 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 $27,500 concessional contributions cap for up to five years and use this to make additional super contributions.

If you exceed the current $27,500 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.

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 is 3.04% for the September 2021 quarter.  

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 2021–22 financial year is $110,000.

If you’re aged under 67, you can bring forward up to three years’ worth of non-concessional contributions in any three-year period. While originally limited to people aged under 65, legislation passed on 17 June 2021 extended the measure to people aged 65 and 66 for non-concessional contributions made on or after 1 July 2020.

However, if you’re aged between 67 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.

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 10% of an employee’s ordinary time wages or salary. This rate is scheduled to increase progressively to 12% by July 2025, as outlined in the table below.

Period	Super guarantee rate
1 July 2002 – 30 June 2013	9.00%
1 July 2013 – 30 June 2014	9.25%
1 July 2014 – 30 June 2021	9.50%
1 July 2021 – 30 June 2022	10.00%
1 July 2022 – 30 June 2023	10.50%
1 July 2023 – 30 June 2024	11.00%
1 July 2024 – 30 June 2025	11.50%
1 July 2025 – 30 June 2026 and onwards	12.00%

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 $58,920 per quarter for the 2021–22 financial year.

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.

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 year	Maximum co-contribution entitlement	Lower income threshold	Higher income threshold
2020–21	$500	$38,837	$54,837
2021–22	$500	$41,112	$56,112

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.

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 up to $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.

To receive the maximum offset you need to contribute at least $3,000 to your spouse’s super.

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.

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.

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:

• You’re over the age of 65
• You (or your spouse) owned your home for at least ten 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.

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 $1.7 million.

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

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.

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.

For the 2021–22 financial year, the CGT retirement exemption has a lifetime limit of $500,000 on exempt capital gains only, while the 15-year CGT exemption has a lifetime cap amount of $1,615,000 for exempt capital gains and/or sale proceeds.

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 2021–22 financial year is $225,000.

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 2021–22 financial year is $1,615,000.

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.

Age of beneficiary	Temporary percentage factor (2019-20 to 2021-22)	Normal percentage factor (2013-14 to 2018-19)
Under 65	2%	4%
65 to 74	2.5%	5%
75 to 79	3%	6%
80 to 84	3.5%	7%
85 to 89	4.5%	9%
90 to 94	5.5%	11%
95 or more	7%	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.

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 birth	Preservation age
Before 1 July 1960	55
1 July 1960 – 30 June 1961	56
1 July 1961 – 30 June 1962	57
1 July 1962 – 30 June 1963	58
1 July 1963 – 30 June 1964	59
From 1 July 1964	60

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 component	Age when lump sum received	Amount subject to tax	Maximum rate of tax (excluding Medicare levy)
Member benefit with a taxable component – the taxed element	Under preservation age	The whole amount	20%
	At or above preservation age but under the age of 60	Up to the low rate cap amount	Nil
		Above the low rate cap amount	15%
	Over the age of 60	Nil	N/A
Member benefit with a taxable component – the untaxed element	Under preservation age	Up to the untaxed plan cap amount	30%
		Above the untaxed plan cap amount	45%
	At or above preservation age but under the age of 60	Up to the low rate cap amount	15%
		Above the low rate cap amount and up to the untaxed plan cap amount	30%
		Above the untaxed plan cap amount	45%
	Over the age of 60	Up to the untaxed plan cap amount	15%
		Above the untaxed plan cap amount	45%
Death benefit lump sum paid to non-dependants with a taxable component – taxed element	Any	The whole amount	15%
Death benefit lump sum paid to non-dependants with a taxable component – the untaxed element	Any	The whole amount	30%
Death benefit lump sum paid to dependants with a taxable component – taxed and untaxed elements	Any	Nil	N/A
Rollover super benefits with a taxable component – the taxed element	Any	Nil	N/A
Rollover super benefits with a taxable component – the untaxed element	Any	Nil up to the untaxed plan cap amount	N/A
	Any	Above the untaxed plan cap amount	45%
Super lump sum benefits less than $200	Any	Nil	N/A
Super lump sum benefits for terminally ill recipients	Any	Nil	N/A

Source: Australian Taxation Office

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 $1.7 million.

Total superannuation balance

Your total superannuation balance (TSB) is the total amount you hold across all you super accounts on 30 June each year. It’s used to determine whether you are eligible for many super-related measures the following financial year.

Some of these measures include carry-forward concessional contributions, non-concessional and bring-forward contributions, government co-contributions and the spouse contributions offset.

To be eligible for these super-related measures in 2021–22 your TSB must not have exceeded $1.7 million on 30 June 2021.

Your TSB is calculated by adding all the amounts in your accumulation and pension accounts, plus any rollover super benefit not yet counted in these accounts, and any outstanding limited recourse borrowing arrangement (LRBA) amounts in your self-managed super fund (SMSF).

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 calculator (2021-22 financial year)
• Income tax: Australian tax brackets and rates (2020–21 and 2021–22)
• Guide to the Low and Middle Income Tax Offset (LMITO)
• How does SAPTO work? (Senior Australians and Pensioners Tax Offset)
• Guide to the Low Income Tax Offset (LITO)
• Personal income tax cuts (2018–2025): What it means for you

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.