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Tax and other useful facts


Section: 6.1

6.1. Summary

The main thing to understand about how super is taxed is that it is taxed at three points - on the way in as contributions, inside the fund as earnings and on the way out as benefits. However, for most people past the age of 60, super is now effectively tax-free. If the member has more than $1.7* million in superannuation, the portion above this threshold will be taxed at 15%. But regardless of how and at what stages superannuation is taxed, it is still at concessional levels compared to other types of investments and this what makes superannuation so special.

Limits, thresholds and special conditions nonetheless still exist around superannuation tax and it is important employers, their employees,  and consumers properly understand these rules or consult with someone who does.

For instance, while an individual or company (on behalf of its employees) may contribute any amount into superannuation, there is a limit to which those contributions attract a tax deduction. Moreover, the Australian Government requires all employers to provide a minimum level of superannuation for their employees, the super guarantee at 10% of an employee's wage or salary.

*This figure was 1.6 million from 1 July 2017 to 30 June 2021

This technical resource is intended for the use of financial advisers only. It is current as at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.

Last modified: Friday, July 9, 2021