Summary
How your super is taxed
As retirement gets closer on the horizon, knowing how tax applies to your super can help you make sure you’re not paying more tax than you need to.
There are two main types of super contributions:
- Before-tax contributions
- After-tax contributions
It’s important to note that tax on super is different to income tax, and in some cases, it can be lower, making super more tax effective.
Understanding how tax works in relation to super can help you grow your super balance.
How is super taxed?
Did you know super is taxed differently to income?
In fact, super is generally taxed in three ways:
- when you make a before-tax contribution
- on investment earnings, and
- when you withdraw super.
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Tax on super contributions
Before-tax contributions
Before-tax contributions are also known as concessional super contributions. They're super contributions you or your employer make from your before-tax income.
Before-tax contributions include:
- employer contributions (and any insurance costs or administration fees they pay for you)
- salary sacrifice contributions you make, and
- any after-tax contributions you make and claim a tax deduction for.
After-tax contributions
After-tax contributions are also known as non-concessional super contributions and are contributions you make from your take-home pay.
- You can only make after-tax contributions if we have your TFN.
- After-tax contributions are only taxed if you go over the non-concessional contributions cap.
- Extra taxes apply to any amounts over the cap.
For up-to-date contribution caps, you can visit ato.gov.au.
You may also choose to claim a tax deduction for your after-tax contributions. Please note that AustralianSuper is required to deduct 15% tax from those contributions.
Claiming you contributions as a tax deduction could reduce the amount of income tax you need to pay, so depending on your personal tax rate, you may pay less tax overall. However, claiming a tax deduction will impact your concessional contribution cap.
How to claim
You can do this easily by logging into your account and completing the notice of intent form.
Important information: to claim a tax deduction for personal super contributions, we must receive your Notice of Intent to claim a tax deduction for personal super contributions form (online or pdf form) before you withdraw your super benefit, transfer any part of your account to an account-based pension, split any of your super with your spouse or close your account. We can’t accept your request for a tax deduction after an application for a benefit payment or to open an account-based pension has been processed.
You can contribute a total of up to $30,000 (concessional contributions cap) before tax each financial year from 1 July 2024.
Before-tax contributions are generally taxed at 15%, unless you:
- earn more than $250,000 pa1.
- haven’t given your TFN to your super fund
- go over the concessional contributions cap.
In the above situations, extra taxes may apply.
Tax you pay on before-tax contributions up to the limit
Your division 293 income Before-tax super contribution limits1 Tax payable Less than $250,000 per year $30,000 a year 15% More than $250,000 per year $30,000 a year 30%1
Taxes relate to your super in various ways, and understanding these can help ensure you’re not paying more tax than you need to.
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Tax benefits of super
Life expectancy is increasing2, so it’s important to make the most of your super. Because super is taxed differently to your income, super can offer some tax benefits, depending on how much you contribute.
Tax on before-tax contributions
Before-tax contributions are generally taxed at 15% (for earnings up to $250,000). Depending on your income, this may be less than your marginal tax rate, meaning you could benefit by making before-tax contributions such as salary sacrificing to super.
Tax deductions on after-tax super contributions
You might be eligible to claim a tax deduction on after-tax contributions to super if you are:
- under 673, or
- aged between 67 and 75 and meet the work test or qualify for the work test exemption4.
To claim a tax deduction, you’ll need to lodge a notice of intention to claim the deduction with AustralianSuper before the earlier of:
- the date you submit your tax return for the year in which you made the contributions, or
- the end of the financial year following the one in which the personal contributions were made.
You can choose how much of your contribution to deduct.
If you think you’re eligible to claim a tax deduction for your super contributions, visit australiansuper.com/ClaimTaxDeduction.
How to claim a tax deduction on super
Online
Online
Step 1: Log in to your account at australiansuper.com/login. You can register for online access to your account if you don’t already have it.
Step 2: Click Account in the navigation menu and select Online forms.
Step 3: Under Start an online form, select Claim a tax deduction and complete the form. When you submit your form you’ll receive a confirmation that we’ve processed your request and notified the ATO. In some instances, requests may take up to five business days to process including where you vary an existing claim or if you are eligible and vary a tax deduction claim for a contribution made more than two financial years ago.
Step 4: Submit your tax return. You’ll need to state the amount you want to claim as a tax deduction in the supplementary section of your tax return.
PDF
PDF
Step 1: Complete the Notice of intent to claim a tax deduction for personal super contributions form. This tells us the amount you want to claim.
Step 2: Send the form to AustralianSuper via our contact us page or post.
Step 3: Receive confirmation from AustralianSuper. Once we receive your form, we’ll write to you to confirm the amount you want to claim.
Step 4: Submit your tax return. You’ll need to state the amount you want to claim as a tax deduction in the supplementary section of your tax return.
Carrying over unused concessional cap amounts
If eligible, you may be able to carry over unused concessional contributions cap amounts from previous financial years. Here’s how it might work:
Example: James' unused concessional cap amounts
James is 35, earns $120,000 pa and has $112,000 in super. In 2023/24 his total concessional super contribution was $22,000. That’s $13,200 in employer contributions and $8,800 in before-tax personal contributions. As the 2023/24 concessional contributions cap was $27,500, James has $5,500 remaining that he can use in 2024/25. If James adds his $5,500 from 2023/24 to the 2024/25 cap of $30,000, he can contribute $35,500 in 2024/25. James can carry over unused concessional contributions like this for 5 financial years5. To be eligible to carry over unused concessional contributions cap amounts your total super balance must be less than $500,000 on 30 June of the previous financial year.
Bringing forward non-concessional contributions
If eligible, you may be able to contribute an extra two years’ worth of after-tax contributions. This is known as the bring-forward rule. Here’s how it might work:
Example: Jana's non-concessional contributions
Jana is 60 and has a super balance of $152,000. She’s getting close to retirement age and wants to boost her super. She’s recently received an inheritance and decides to put $300,000 of this into her super as an after-tax contribution. Although this amount is over her non-concessional cap for the FY2024/25 financial year, Jana can use the bring-forward rule to contribute a maximum of $360,000 after-tax to her super this financial year. Jana is eligible to add extra because she’s under age 75 and her total super balance is under the relevant limit. See the limits below.
Non-concessional contributions bring-forward period4
total superannuation balance on 30 june of the previous year non-concessional contributions cap for the first year Bring-forward period Less than $1.66 million $360,000 3 years $1.66 million to less than $1.78 million $240,000 2 years $1.78 million to less than $1.9 million $120,000 No bring forward period, general non-concessional contributions cap applies $1.9 million or more Nil n/a
Low income super tax offset
If you’re eligible and earn $37,000 or less, the government will refund 15% of your total before-tax contributions made by you or your employer, up to a maximum of $500 pa. The amount will automatically be calculated by the ATO and deposited into your super account.
How super is taxed
What Tax rate Details Investment earnings Up to 15% This tax is deducted from investment earnings before the crediting rate is determined.
No tax is deducted from the crediting rates of Choice Income members unless members are using a transition to retirement strategy in which case up to 15% tax appliesIncome streams (pensions) and lump sum withdrawals from AustralianSuper if you’re 60 and over No tax payable6 Both cash lump sum withdrawals and any retirement income payments you receive will generally be tax-free Lump sum withdrawals from AustralianSuper (if you’re under 60) Tax-free component
- no tax payable.
Taxable component6
- under your preservation age: 22%7 tax
Cash lump sum withdrawals (where you’re eligible to receive your super benefit) are divided into a tax-free and a taxable component. These components are calculated from the type of contributions that have been made to your account. To find out how much of your super is tax-free and how much is taxable you can get a benefit quote from your online account. Income streams (pensions) from AustralianSuper (if you’re under 60) Tax-free component
- no tax payable.
Taxable component5
- under your preservation age: marginal tax rate8,9
Income stream withdrawals (where you’re eligible to receive your super benefit) are divided into a tax-free and a taxable component. These components are calculated from the type of contributions that have been made to your account. To find out how much of your super is tax-free and how much is taxable you can get a benefit quote from your online account at call us on 1300 300 273. There are other circumstances that can affect how much you can contribute and the amount of tax you pay on your super, including low-income tax offset, spouse contributions offsets, and downsizer contribution measures. For eligibility criteria visit australiansuper.com/superannuation/how-your-super-is-taxed
Read more
- Tax and Super
- How your super is taxed
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Important Information
- If your adjusted taxable income (including your before-tax contributions) is more than $250,000 per year, your before-tax contributions will be taxed at 30%, to that extent. This extra 15% tax is sometimes referred to as division 293 tax or div 293 tax. Find out more at ato.gov.au
- Australian Bureau of Statistics (2020-2022), Life expectancy, ABS Website, accessed 13 May 2024.
- If you are under 18 at the end of the income year in which you made the contribution, you also need to earn income as an employee or business operator during the year.
- At the start of the financial year, you must be under age 75. Also when you turn 75, your non-concessional contributions must be received by the 28th day of the following month.
- Starting from 1 July 2019, your concessional contribution cap may be increased by any unused concessional contribution cap amounts carried forward from the last 5 years, provided you satisfy all of the requirements. Please visit ato.gov.au for more information.
- If your taxable component includes an untaxed element, additional tax may be applied to that element.
- Includes Medicare levy.
- A tax offset of 15% may be available if you are receiving a disability super benefit.
- Plus Medicare levy.