Taxation of Super Funds in Australia



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Superannuation money is taxed at three different times during its life.

Contributions: when it goes into the fund.
Investment Earnings: while it is in the fund.
Super Withdrawals: when it leaves the fund.

Tax on contributions

Employer and salary sacrificed contributions are taxed at 15%.
Personal after-tax contributions and those received under the government’s co-contribution scheme are not taxed.
No Tax is payable when funds are transferred switching funds.

Tax on investment earnings

Investment earnings in the fund are taxed at a maximum rate of 15%.
Fund earnings treated as Capital gains are taxed at 10%.


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Tax on withdrawals

Taking Super as an Income Stream

If you are aged 60 or over your income will usually be tax-free.
If you are under age 60 you may pay tax on your super pension.

Lump sum withdrawals

At age 60 or over any withdrawals from a taxed super fund are normally tax-free.
Some funds, such as government super funds are tax free funds, and may not be tax-free on withdrawal.

Under age 60 you may pay tax on withdrawals.
There is a low rate threshold, which can be paid tax-free. This is indexed annually.
The threshold does not include the tax-free portion of your super account, which will be returned to you tax-free.
Any amounts over the low rate threshold will be taxed at 16.5% (including Medicare Levy).

Under age 55, the lump sum will be taxed at 21.5%. (There are limited circumstances under which you can access super before age 55).

We recommend you seek financial advice before making a decision to withdraw funds from your super.

Details quoted are at March 2013, and subject to changes.

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