The current (20 September 2019 to 19 March 2020) maximum rates of Age Pension are as follows:Single: $933.40 per fortnight (approximately $24,268 per year) Couple (each): $703.50 per fortnight (approximately $18,291 per year)Note: Includes base pension + supplements. Learn more about Age Pension rates. But not ... 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.
Is super better or worse than ever?
Superannuation in Australia has a history that’s over 150 years long, but it’s really only in the last three decades that it’s become accessible to all working Australians.In that time, it’s undergone constant change, but does that mean we’re worse off than before – or better? ... Read more
Super strategies after losing your spouse: What are the rules?
Most retired couples plan to leave the bulk of their estate to their surviving spouse, which sounds straightforward. But where super is concerned, nothing is ever simple. If you’re both retired and drawing a pension from your super, inheriting your partner’s super could have complex tax implications if you’re not ... Read more
Find out about the new contribution rules that help bump up SMSF balances and reduce tax
New rules mean self-managed super fund (SMSF) members can make additional contributions to their SMSF, which can bump up their balance and at the same time offset their tax bill.There are two contribution strategies that could provide SMSF members with up to $50,000 in deductions against their income in a financial ... Read more
Taking your super early due to ill health? 7 tips to help
Nobody expects to become sick. Even fewer of us think declining health will see us leaving employment earlier than we want, but in fact it’s quite common.In 2016-17, personal health or physical ability was the main reason 21% of older workers decided to retire, according to Australian Bureau of Statistics ... Read more
The pros and cons of investing your inheritance into super
Receiving an inheritance is usually a mix of emotions. Although you’re happy about the improvement to your finances, it’s often coupled with sadness about the loss of a family member or friend. It also brings lots of confusion about the best way to manage the bequest. While your first thought may be to pay off your ... Read more
How inflation affects your retirement income forecast
With the annual inflation rate tamely cruising along at only 1.6% (June quarter 2019), movements in the official Consumer Price Index (CPI) haven’t really been a front-of-mind issue for most of us. But that doesn’t mean you can ignore how inflation – even at a pretty low rate – will affect your post-work standard of ... Read more
How to read a super fund PDS
By the time you retire chances are that superannuation will be your biggest store of wealth outside the family home. Yet we tend to spend more time researching the best mobile phone plan or our next holiday than we do on our super. So even if you find super mind-numbingly dull and difficult to understand, it matters. ... Read more
Retiring overseas: Implications for your super and tax
In 2016, 11,660 Australians over 55 permanently relocated overseas. While the exact number is hard to pin down, various industry estimates put the total number of Australian retirees who are now living overseas at around 90,000, a figure which has risen steadily in recent years.The most popular retiree destinations ... Read more
Reversionary pensions: What they are and how they work
When you retire, there are lots of decisions to make about whether to take a lump sum or start an account-based pension.You also need to decide how you would like the remaining balance of your super account to be distributed when you die. Normally, that means making a death benefit nomination. For more information, ... Read more
Strategies for making the most of your super in the gig economy
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
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