About 2.5 million Australians are now employed on a casual basis, according to The Australian Bureau of Statistics. That’s more than a quarter of the workforce. And the gig economy – like it or not - is growing fast. Changing work landscape The gig economy has come about in part, to meet the changing labour needs of ... Read more
Super and tax
A Super Guide
Superannuation is intrinsically linked with tax.
Super is a tax-effective investment vehicle designed to help fund your retirement by:
- having lower (concessional) tax rates for fund contributions and earnings
- generally providing tax-free withdrawals once you reach your preservation age and meet a condition of release
Super is typically taxed at three stages:
- when your contributions enter your fund,
- when your fund earns investment income, and
- when you withdraw benefits (though these are generally tax-free if you’re over 60).
Superannuation tax legislation can be complex. This section is designed to give you a general understanding of how super is taxed in Australia. It may also be worthwhile to seek independent professional advice based on your individual superannuation circumstances.
Note: It’s essential to provide your super fund with your tax file number, otherwise your fund is legally obliged to tax your contributions, fund earnings, and potentially withdrawals at the highest marginal tax rate (currently 47%).
The following sections focus on specific areas about tax and superannuation:
- Contributions tax
- Investment income tax (earnings tax)
- Retirement phase
- Superannuation benefit payments tax
- Superannuation death benefits
Learn more about the key aspects about tax and super in the following SuperGuide articles:
Set out below are all SuperGuide articles that relate to Super and tax.
Case studies: How is the Age Pension assessed?
The current (20 March 2019 to 19 September 2019) maximum rates of Age Pension are as follows: Single: $926.20 per fortnight (approximately $24,081 per year) Couple (each): $698.10 per fortnight (approximately $18,051 per year) Note: Includes base pension + supplements. Learn more about Age Pension rates. Not everyone ... Read more
Who gets your super when you die? A guide to death benefit nominations
If you have a valid will in place when you die, most of us assume it’s simply a matter of our executors taking care of all the paperwork and paying out our remaining assets to our beneficiaries in the proportions listed in the will. But in fact, when it comes to your super account, what you state in your will doesn’t ... Read more
Proportioning rule and super tax: What it is and why it matters
When it comes to your super benefits, tax is always at the heart of it, whether it’s when you make a contribution, or when you take your money out at the other end. As the super system offers special tax benefits to help Australians save for their retirement, there are strict rules in place about how much tax you pay ... Read more
A simple guide to what tax is payable on super death benefits
When you die, the tax man can be pretty quick to put his hand out to take his cut, and this also applies to the balance of your super account. But working out just how much of your super death benefit will be paid to your nominated beneficiaries and how much will go to the ATO isn’t straightforward. ... Read more
‘Pension tax’ deemed unfair
Note: This article was published before the government announced changes to the deeming rates on 14 July 2019, dropping the lower rate from 1.75% to 1%, and the higher rate from 3.25% to 3%. For more information on the changes see SuperGuide article Age Pension deeming rates cut, at last, and learn more about deeming ... Read more
Guide to the Low and Middle Income Tax Offset (LMITO)
Note: In the 2019 Federal Budget the coalition government proposed increasing the LMITO from the 2018/2019 financial year. This has now passed Parliament and will soon be legislated. The ATO has confirmed they will apply the LMITO for 2018/2019 tax returns. About LMITO The Low and Middle Income Tax Offset (LMITO) helps ... Read more
Income tax: Australian tax brackets and rates (2018/2019 and 2019/2020)
Note: In the 2019 Federal Budget the coalition government proposed income tax cuts, building on the Personal Income Tax Plan announced in the 2018 Federal Budget. These have now passed Parliament and will soon be legislated. The Australian Tax Office (ATO) collects income tax from working Australians each financial ... Read more
Guide to the Low Income Tax Offset (LITO)
Note: In the 2019 Federal Budget the coalition government proposed increasing the LITO rate from 1 July 2022. This has now passed Parliament and will soon be legislated. About LITO The Low Income Tax Offset (LITO) means working Australians can earn up to $20,452 before they need to pay any income tax. It was ... Read more
Australian personal income tax cuts from 2018/2019 year
In the 2018 Federal Budget the coalition government announced the Personal Income Tax Plan, a seven-year plan of income tax cuts. The plan became law on 21 June 2018. In the 2019 Federal Budget the coalition government proposed further cuts, which passed through parliament on 4 July 2019, and will soon become ... Read more
2019/2020 guide to non-concessional contributions (after-tax super contributions)
Most employees know their employer is helping to build their retirement savings by making regular contributions – like the Super Guarantee (SG) – into their super account as part of their salary package. These contributions are taxed concessionally – or at a special low rate – of 15% to encourage Australians to save ... Read more
Your simple guide to Superannuation Guarantee (SG) contributions
As employees, most of us see the regular note on our payment summary listing the amount for our employer’s Superannuation Guarantee (SG) contribution into our super account and rarely give it much thought. To help you understand it a little better, here’s SuperGuide’s simple explanation of the SG and what it means for ... Read more
How does SAPTO work? (Senior Australians and Pensioners Tax Offset)
About SAPTO SAPTO is a tax offset for eligible seniors and pensioners in Australia. A tax offset can lower or remove your need to pay income tax, but it doesn’t mean you can get a refund. You’ll also still need to pay the Medicare Levy if you’re not eligible for an exemption or reduction. The Australian Taxation ... Read more
Your tax guide to accessing your super under age 60
Many people dream about retiring early, taking their super and heading off to enjoy their remaining years, but it’s important to understand the tax implications before you take the plunge. Even if you are retiring you may not be able to access your super if you are under age 60 and if you do, the tax man is sure to ... Read more
2019/2020 guide to concessional contributions (before-tax super contributions)
Although it can be difficult getting your head around all the different types of super contributions that go into your super account, concessional contributions are the ones you are mostly likely to have and are pretty straightforward to understand. Concessional contributions – what’s that mean? Concessional ... Read more