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Super is a great way to save money for your retirement. It is generally taxed at a lower rate than your regular income. You typically pay 15% tax on your super contributions, and your withdrawals are tax-free if you’re 60 or older. The investment earnings on your super are also only taxed at 15%.

Key points:

  • Money going into your super is generally taxed at a lower rate than your regular income.
  • Concessional contributions can be before-tax contributions and are generally taxed at 15%. This includes the super your employer pays for you, and any super you salary sacrifice.
  • Non-concessional contributions are contributions you can make from your after-tax savings.
  • Earnings on investments within your super fund are taxed at 15%.
  • Consolidating your super is generally not taxed.
  • If you are 60 or older, you will not be taxed on withdrawals.
  • If you are under 60, the tax you will pay on any lump sum payments is 22%.

How much tax you pay on your super

This table show you how much tax you pay on contributions to your super.

Scroll table horizontally on mobile

Contribution type Percentage of tax you pay
Employer contributions
These are super contributions paid by your employer. This includes compulsory Super Guarantee contributions as well as employer voluntary contributions.		 15%*
Salary sacrifice
This is money your pay to your super account from your before-tax income.		 15%*
Personal contributions
Any contributions you make from your take-home pay.		 0%
Personal deductible contributions
After-tax contributions made from your take-home pay for which you have claimed a tax deduction.		 15%
Spouse contribution
Super paid by you to your spouse’ super account,
or
to your account by your spouse.
This is a contribution made by money from take-home pay, which means tax has already been paid.		 0%
Government co-contribution 0%
Transferring super
This is when you consolidate your super into one account.		 0%
Investment earnings
This is the money your super earns.		 15%
Investment earnings on retirement income
This is the money your super earns if you are drawing retirement income.		 0%

 

*If your income and your super together, add up to more than $250,000, you are a high-income earner. There is an extra 15% tax that applies on super contributions over the $250,000 threshold. This is called ‘Division 293 tax’ and will be calculated by the ATO and included in your notice of assessment.

Tax paid on before-tax contributions

Adding to your super with before-tax contributions can help to reduce the tax you pay.

These are contributions you have not paid any personal income tax on. They are called ‘concessional contributions’ because the concessional rate of tax paid on super is 15%.

This is less than the lowest income tax rate of 16% (if you earn more than $18,200 per year).

Types of concessional contributions include:
 

  • Superannuation Guarantee contributions. This is 11.5% of your before-tax salary that your employer must pay directly into super.
  • Salary sacrifice contributions. This is where you arrange for your employer to take money out of your before-tax income and put it into your super. This reduces your income, so you pay less tax.
  • Personal deductible contributions. These are after-tax contributions you claim a tax deduction on, in your tax return.

Tax paid on after-tax contributions

Another way to add to your super is to deposit money after your income has been taxed.

Add money to your super after tax

An after-tax contribution is also known as a ‘non-concessional contribution’. These are contributions where tax has already been paid. This is usually in the form of personal income tax. This is the tax you pay on your salary. Your super fund does not deduct tax from after-tax contributions.

If you make an after-tax contribution, you can then claim a tax deduction on this amount in your tax return.

After-tax contributions include:
 

  • Contributions made from your take home pay
  • Cash in your bank account that you contribute to super
  • Proceeds from an inheritance
  • Proceeds from the sale of an investment property

Tax on investment earnings

Investment earnings in your superannuation account are only taxed at 15%. This tax is deducted from your investment earnings by the fund, and you don’t need to do anything. If you open a retirement income stream, your investment earnings are tax-free.

Tax on transfers between super funds

Generally, transfers to or from other super funds are not taxed. This includes when you consolidate your funds into one super account.

How your super is taxed on withdrawals

If you are 60 or older, you will not be taxed.

You may be able to access your super early under special circumstances like financial hardship or compassionate grounds. If you are under 60, the tax you will pay on any lump sum payments is 22%.

Tax-free amounts on lump sum withdrawals

Regardless of your age, no tax is paid on tax-free amounts. This applies to everyone.

It is important to understand your tax-free and taxable components if you are considering withdrawing from your super. To find your mix of components, you can:

  • login to your account online
  • look at your super statement, or
  • contact your fund for help.
     

Related information

 

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Where to next?

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How to claim a tax-deduction on your contributions

If you are eligible for a tax-deduction, you can apply to us.

Find out how

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