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Superannuation taxes

Check out Sunsuper's simple, easy to use glossary of all the different terms you might come across when researching superannuation. Find a clear and simple definition for anything relating to superannuation taxes, from superannuation tax deductions to the superannuation tax rate.

 

Superannuation contributions tax

Contributions made to super before-tax are called concessional contributions and are taxed at 15%. These include Superannuation Guarantee contributions your employer must make to your super on your behalf, salary sacrifice contributions, and any contributions you make and then claim a tax deduction on. After-tax or voluntary contributions have already been taxed outside of super before they make it into your savings, so are not subject to further tax once contributed to super. 

 

Superannuation taxes

Your superannuation can be taxed at three stages: when money goes into your super account as a contribution, while it is in super as a tax on investment earnings, and when it leaves your super account a superannuation benefit. Concessional superannuation contributions are taxed at 15%. Investment earnings your super balance makes while it is within your super fund are also taxed at 15%. Once you retire, earnings on your super balance and the money you withdraw from super are tax free. Other withdrawals from super – e.g. through a Transition to Retirement Income Account before you fully retire, on compassionate grounds or as a Death benefit may be subject to tax. 

 

Superannuation tax rate

Concessional superannuation contributions are taxed at 15%. Investment earnings your super balance makes while it is within your super fund are also taxed at 15%. After-tax or voluntary contributions have already been taxed outside of super before they make it into your super account, so are not subject to further tax once contributed to super. Once you retire, you can withdraw your super tax free if you are over age 60. Other withdrawals from super – e.g. through a transition to retirement pension before you fully retire, on compassionate grounds or as a Death benefit may be subject to tax at varying rates. 

 

Pre tax superannuation contributions

Pre-tax superannuation contributions are also called concessional contributions and include salary sacrifice contributions. Pre-tax contributions are made from your salary or earnings before your marginal tax rate is applied and are subject to 15% tax. This 15% rate may be lower than your marginal tax rate – so you may pay less tax on pre-tax contributions to super than you would if you earned the money outside of super.

 

Post tax superannuation contributions

Post-tax superannuation contributions are also called non-concessional contributions and include voluntary contributions you make to your super from your after-tax pay or other savings. Post-tax or voluntary contributions have already been taxed outside of super before they make it into your super account, so are not subject to further tax once contributed to super. 

 

Superannuation tax deduction

Anyone under age 75 years can make a contribution to super then claim it as a tax deduction. This may assist people who are self-employed and therefore unable to make a salary sacrifice arrangement with their employer to make concessional or pre-tax contributions to super. Any contribution you make to super and then claim as a deduction for will be classed as a concessional contribution and count towards your concessional contribution cap of $25,000 per year.