Reading time: 3 minutes
There are lots of rules when it comes to our super system. But not every rule applies to you at every age, so it’s worth figuring out which ones have an impact for your particular age group.
The rules at different ages govern how much and when you can contribute to super, when you can get your hands on your savings and how much tax you will pay. These are designed to stop people taking advantage of the generous tax benefits offered as part of Australia’s super system.
To make things a bit easier to understand, here’s SuperGuide’s simple guide to the super rules applying to you if you’re just starting out in the super system.
Super rules if you’re in your teens
The super system is designed to help you save money for your retirement over your entire working life. It holds money contributed by both you and your employer and will help supplement your income during your retirement years.
The rules that apply to your super when you are aged under 18 years are split between those covering when money goes into your super account (contributions) and when it comes out (withdrawing):
1. Contributing to your super
Superannuation Guarantee (SG)
If you are aged under 18 and being paid $450 or more (before tax) in a calendar month and work more than 30 hours a week, your employer must pay SG contributions (9.5% in 2019/20 and 2010/21) into your super account.
If you don’t meet these conditions, your employer is not required to make SG contributions for you. Your employer may still choose to make super contributions on your behalf even though they are not legally bound to do so.
If you work in a private or domestic capacity (for example, as a paid nanny), you still need to work more than 30 hours per week to qualify for employer-paid SG contributions.
Once you meet these conditions, super is payable for all employees, whether you are working full-time, part-time or are casually employed.
There are annual limits or caps on the amount of money you and your employer can contribute into your super account.
If you’re aged under 18, you are subject to the same caps or limits on your super contributions as an adult. From 1 July 2017, the general concessional (before-tax) contributions cap is $25,000 for everyone, regardless of their age. (From 1 July 2018, you can also make ‘carry-forward’ concessional super contributions if you qualify.)
Your non-concessional (after-tax) contributions cap is $100,000, or $300,000 over a three-year period if you use the ‘bring-forward’ rule (in 2019/20 and 2020/21).
Personal (or voluntary) tax-deductible contributions
To be eligible to claim a tax deduction for a personal super contribution if you are under 18 at the end of the financial year in which you plan to claim the deduction, you must have earned income as an employee or as a business operator during that year.
Remember, once you put contributions into super, the money can only be accessed if you meet a condition of release such as permanently retiring after reaching your preservation age, reaching age 65 or becoming permanently incapacitated or terminally ill.
Contributions made by someone other than an employer
If you are aged under 18 and a parent or other relative decides to make contributions into your super account, these contributions will count towards your non-concessional (after-tax) contributions cap.
First Home Super Saver (FHSS) Scheme
Buying your own home is a goal for many young people and the government’s FHSS Scheme could be a useful way to save part of your deposit inside the lower-taxed environment of the super system.
Your FHSS contributions (up to $30,000) are counted towards your concessional or non-concessional super contribution caps.
Self-managed super funds (SMSFs)
Although it’s never too young to start thinking about your retirement, you can’t be a trustee and run your own super fund if you are aged under 18.
You can, however, be a member of an SMSF if you are under 18 – provided you are represented by a trustee who agrees to act on your behalf (such as a parent or guardian).
Superannuation death benefits
If you are under 18, you get special treatment if you receive a death benefit paid from a super fund on the death of a parent.
The special rules applying in this situation mean you are automatically treated as a dependant for super and tax purposes, so you will receive the super death benefit without any tax needing to be paid on it.
2. Withdrawing your super
Getting your money
To withdraw your savings from your super account, you need to have both reached your preservation age and met a condition of release.
If you are aged under 18, your preservation age is 60 as you were born after 1 July 1964.