When opening their annual member statement, many super fund members see a comforting projection of how much their account balance is likely to be when they retire, and how much income it will provide in retirement. According to super industry researcher SuperRatings, 42% of super funds now provide retirement ... 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.
Definitive guide to the $1.6 million transfer balance cap
One of the most significant changes to superannuation – the introduction of the $1.6 million transfer balance cap – became effective on 1 July 2017. The Australian Taxation Office (ATO) estimates the changes will impact only 1% of Australian superannuants, however that 1% needs to be clearly across the Treasury ... Read more
10 ways myGov can help you master your super
Knowing how much you have in your super account and if your employer has been making regular contributions are important pieces of information when it comes to managing your financial affairs. That’s now much easier to do thanks to upgrades to the ATO’s online services and the government’s myGov portal. By linking your ... Read more
How to structure your super if you’re going overseas
There are lots of rules that apply to your super if you’re going overseas for work or play for an extended period. If you are a member of an SMSF, it’s essential you understand the restrictions that apply to the fund under these circumstances or you could potentially face a serious reduction in your wealth. The rules ... Read more
How does SAPTO work? (Senior Australians and Pensioners Tax Offset)
A tax offset can reduce the amount of income tax you pay, but it doesn’t mean you 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 Office (ATO) assesses your eligibility when you submit your tax return. BackgroundThe Senior ... Read more
How to teach your kids about super
It’s safe to say that young adults in Australia today are unlikely to have a burning interest in super and who could blame them. Travel, study, first love, first job, first home are way more pressing issues. But if you are a parent of one of these young adults – or a grandparent, aunt or uncle – you probably wish you ... Read more
Guide to transition to retirement pensions (TTRs or TRISs)
If you’re on the final stretch to retirement and would love to start winding back your working hours but you don’t think you can afford it, listen up. Ditto if you plan to keep working full-time for a while longer and want to boost your super but haven’t got the ready cash to make extra contributions. Help could be at ... Read more
Guide to tax-deductible superannuation contributions
If you’ve got cash to spare and would like to boost your retirement savings, then making a tax-deductible super contribution is a great way to get the maximum bang for your buck. Yes, that’s right. You can boost your super and get a tax deduction to sweeten the deal. But as with everything to do with super, there are ... Read more
Case studies: How is the Age Pension assessed?
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
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