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
- The tax you pay on withdrawals from your super depends on your age and the amount withdrawn.
How much tax you pay on your super
This table show you how much tax you pay on contributions to your super.
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| 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 19% (if you earn more than $18,200 per year).
Types of concessional contributions include:
- Superannuation Guarantee contributions. This is 11% 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
How your super is taxed on withdrawals
The amount of tax you may pay on any withdrawals from your super depends on your age, when you were born, and your work status.
You may be able to access your super early under special circumstances like financial hardship or compassionate grounds. If you are under 60, any lump sum payments are generally taxed between 17% and 22%.
If you are 60 or older, you will not be taxed.
Lump sum withdrawals
You may be able to withdraw a lump sum from your super without paying tax. To do so, you will need to meet a condition of release related to your age and working status.
Your age, when you were born, and your work status determine when you can withdraw your super.
Work out your preservation age using the table below.
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| If you were born |
Your preservation age is |
|---|---|
| Before 1 July 1960 |
55 |
| 1 July 1960 – 30 June 1961 |
56 |
| 1 July 1961 – 30 June 1962 | 57 |
| 1 July 1962 – 30 June 1963 | 58 |
| 1 July 1963 – 30 June 1964 | 59 |
| 1 July 1964 or later | 60 |
Why does preservation age change depending on the year you were born?
The Government decides the preservation age rules. Recognising that people are living longer in retirement, it is gradually increasing the preservation age from age 55 to 60. It's designed to encourage Australians to grow larger super balances so they can retire with more money.
Use the table to understand how lump sum withdrawals from super are taxed:
Scroll table horizontally on mobile
| Tax on super lump sum withdrawals | Taxed Element* |
|---|---|
| If you are under preservation age, the tax you will pay is | 22% |
| If you have reached your preservation age, and are between 55 to 60 | |
| If you withdraw up to $235,000, this is known as the low rate cap**. The tax you will pay is | 0% |
| If you withdraw over the low rate cap of $235,000 the tax you will pay is | 17% |
| If you are 60 or over, the tax you will pay is | 0% |
*Includes Medicare Levy
**Low rate cap amount. The low rate cap amount is the limit set on the amount of taxable components (taxed and untaxed elements) of a super lump sum that can receive a lower (or nil) rate of tax. It applies to members that have reached their preservation age but are below 60 years. To learn more about this visit https://www.ato.gov.au/Rates/Key-superannuation-rates-and-thresholds/?anchor=Lowratecapamount#Lowratecapamount
Learn more about when you can withdraw your super
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
- Take your Aware super to your new job
- Before tax contributions
- After tax contributions
- How much can you contribute to super
- Salary sacrificing your super
- ATO - Tax on lump sum withdrawals
- ATO - eligibility to claim low-income super tax offset
- Claim a tax deduction on your super contributions
Related forms
- Notice of intent to claim a deduction for personal super contributions - via Member Online
Where to next?
Simple advice at no cost
Take advantage of simple financial advice over the phone, for answers to questions about your Aware Super account.
Attend an event
Join our experts as they break down super and finances into easy-to-understand topics through our live webinar education series.
How to claim a tax-deduction on your contributions
If you are eligible for a tax-deduction, you can apply to us.