Super is a tax-friendly way to save for retirement, because it’s generally taxed at a lower rate than your regular income.
How it works:
How your super contributions are taxed depends on the type:
| Type of contribution | Tax rate | Yearly cap amount |
|---|---|---|
Employer contributions Compulsory super guarantee contributions paid to your account by your employer and employer voluntary contributions. |
15% | $30,000 (concessional contributions cap) |
Salary sacrifice Money you pay to your super account from your regular salary before-tax income. |
15% | |
Personal deductible contributions After-tax contributions you make from your take-home pay for which you’ve claimed a tax deduction. |
15% | |
Personal after-tax contributions Any contributions you make from your take-home pay. |
0% | $120,000 (non-concessional contributions cap) |
Spouse contributions Super you pay to your spouse or de facto partner’s super account or super paid to your account by your spouse. Since it’s made by money from take-home pay, tax has already been paid. |
0% | |
Downsizer contributions A non-concessional contribution from the proceeds of the sale (or part sale) of your home. |
0% | Up to $300,000 (once-off) |
Learn more about before-tax contributions and salary sacrifice, after-tax contributions, and contribution caps.
Your super is invested in either our default option (where the majority of our members are) or the investment options you’ve self-selected. Most investment earnings (like dividends, interest, or net capital gains) are taxed at 15% while your super is in the accumulation phase.
Once your super moves into the retirement phase (in a Retirement Income account), investment earnings are generally tax-free. Learn more about the basics of investments in super.
When the time comes to retire or when you are eligible to access your super, the way it’s taxed depends on your age and whether you withdraw it as a lump sum or as part of an income stream. Regardless of your age, no tax is paid on tax-free amounts. This applies to everyone.
Here’s what might form part of your tax-free or taxable components:
The table below sets out the tax applicable to any taxable components to a withdrawal.
| Your age | Tax on lump sum withdrawals |
Tax on income streams |
|---|---|---|
| 60 or over | Tax-free | Tax-free |
| Under 60 | 22% (including the Medicare levy) or your marginal tax rate, whichever is lower. |
You may pay 22% but your income payments have two parts:
|
Check the ATO rules for lump sum withdrawals
If super is paid out after a person’s death, the amount of tax due depends on who receives it:
Find out more about nominating a beneficiary or visit the ATO’s guide to death benefits.
You may be able to reduce your taxable income by claiming a deduction for personal contributions.
To do this, you need to:
Learn how to claim a deduction (make a personal contribution tax claim) or check the ATO’s guide to deductions (ATO – claiming tax deductions for super contributions).
Before-tax contributions (like employer or salary sacrifice) are taxed at 15% when they enter your super. After-tax contributions aren’t taxed on entry but count toward your non-concessional cap.
Contributions tax helps keep super fair across different income levels. Most people pay 15% but higher-income earners may pay an additional tax. It’s still a much lower tax rate than most income tax rates.
The concessional cap is currently $30,000. If you go over this amount, the extra amount may be taxed at your marginal income rate, and additional taxes can apply.
Learn more about contribution caps.
Employer and salary sacrifice contributions are reported automatically by your employer. If you’re claiming a deduction for personal contributions, you’ll need to lodge a valid notice of intent via Member Online.
Most people can access their super when they reach their preservation age and retire. Learn more about when you can access super early.
