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Taxation of superannuation funds

How is the super fund taxed?

Section: 11.1

11.1 How is the super fund taxed?

The main thing to understand about how a super fund is taxed is that it used to be 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 members age 60 and over, a super fund is now effectively tax-free. Regardless of what stage a member is at, superannuation is taxed at extremely concessional levels compared to other types of investment and this is what makes superannuation so special.

Limit, thresholds and special conditions nonetheless remain around superannuation tax and it is important to understand these rules or even consult someone who does.

In order for the superannuation funds to be treated at the concessional tax levels (funds to be taxed at 15%), the fund must be a complying fund.

A complying fund is determined by APRA and provided with a notice stating that their status as a complying fund. All SMSFs are governed by the ATO.

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: Monday, July 12, 2021