SuperGuide

Simple superannuation and retirement planning information

Super and tax

A Super Guide

A superannuation fund is not an investment: rather it is a structure — a tax-effective investment structure. The tax incentives that make superannuation attractive as a savings and investment vehicle, are also the same features that make super so complex.

An appropriate question to ask, is whether the tax savings offered by a super fund structure justify shifting some, most or all of your savings into a superannuation fund.

Essentially, a superannuation account is an investment account that you cannot access until a certain age (and/or you satisfy certain conditions), which is generally taxed at a lower rate than most Australians pay in income tax. For lower-income earners however, superannuation also offers some incentives, such as the Low Income Superannuation Tax Offset (more a tax compensation measure than an incentive) and the Co-contribution Scheme.

Find out how your superannuation is taxed, including what happens if you retire before the age of 60, the tax-free benefits on or after the age of 60, how the earnings on your super savings are taxed, including the tax treatment of your super’s investment earnings in retirement phase.

You can discover how your super contributions are taxed, and the tax implications of leaving your super benefits to family or friends when you die.

You can also learn some of the popular tax-effective super strategies, including how the super tax rules affect SMSFs.

Note: From 1 July 2017, the federal government introduced a transfer balance cap, which is a limit on the amount of super that can be transferred into retirement phase, and essentially limits the amount of tax-exempt earnings a super account can enjoy (see SuperGuide article Retirement phase: A super guide to the $1.6 million transfer balance cap).

Click on the links directly below to access the following topics about superannuation and tax:

Set out below are all SuperGuide articles referring to Super and tax.

For over-65s: Ten tips when making super contributions

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Australians can make voluntary superannuation contributions up to the age of 74 (that is, before you turn 75), and these super contributions can be concessional (before-tax) or non-concessional (after-tax) contributions. If you’re aged 65 or over however, then you must satisfy a work test, if you intend to make super ... Read more

Managing capital gains tax with super contributions

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Q: I am about to make a capital gain of about $200,000 on an investment property I have owned for several years. My marginal tax rate is 32.5% and I am an employee, and 43 years old. I want to contribute the equivalent of the capital gain to my super (which is not a self-managed fund), so I can save some money for the ... Read more

SMSFs: How do I calculate CGT on an asset sale?

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Q: If I purchased a rental property in my SMSF for say $300,000 five years ago and the house is now valued at $400,000 in the SMSF what will be the capital base for the calculation of future capital gains tax (CGT) if I sell the flat? Will it be the original $300,000 or the $400,000? A: We are not permitted to ... Read more

Capital gains: Reducing income tax via super contributions

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Q: I have a self-managed super fund (SMSF), and I also have two investment properties in my personal name. When I sell the properties, I will be required to pay capital gains tax. Can this capital gains tax be offset by a contribution to the SMSF which would be tax-deductible? Would there be a 15% contributions tax? I ... Read more

SMSFs: Selling a property asset and CGT

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Q: If my self-managed super fund (SMSF) owns an investment property, and the SMSF later sells the property, what is the amount of capital gain tax payable by the SMSF? A: Before we respond, please note that anyone considering the tax implications of a super strategy or investment decision should speak to a ... Read more

LISTO: Super tax refund for lower-income earners

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In a welcome backflip, as part of its May 2016 Federal Budget, the Coalition government announced it would extend the Low Income Super Contribution (LISC) beyond its legislated expiry date of June 2017. This extension is now law, and since July 2017, the LISC has been renamed the Low Income Superannuation Tax Offset ... Read more

Non-cash contributions, CGT and contributions caps

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Q: My husband and I, both near 60, plan to spend around $700,000 of our cash to buy shares soon. We don’t have a trust structure or company (both PAYG) and wondered how/if we could buy them in the name of our self-managed super fund? How do we get the cash from our names to the super fund? I’ve read about in-specie ... Read more

Superannuation tax refund: 10 facts you should know

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If you earn less than $37,000, and you, or your employer, makes concessional (before-tax) contributions to your super fund, you may get a refund of up to $500 a year for the contributions tax deducted from the super contributions. Employer contributions are typically compulsory Superannuation Guarantee contributions, ... Read more