How is super taxed?
Your super might be subject to tax at three stages: when contributions go into your account, on any investment earnings made in your account, and when you withdraw your money.
Please make sure that we have your Tax File Number (TFN) as, without it, we must deduct a higher level of tax from your contributions. For more information, see below.
Concessional contributions are sometimes called ‘before-tax' contributions. These contributions are usually paid into your super from your salary before you have paid tax.
- Compulsory SG contributions made by your employer
- Salary sacrifice contributions
- Any personal contributions for which you notify us of your intention to claim as an income tax deduction
Concessional contributions are taxed at 15% at the time the contribution is made into your super fund.
The before-tax contributions cap for 2019/2020 is $25,000.
Beware: the Australian Government has set limits on the amount of concessional contributions that can be made each year without having to pay additional tax.
The before-tax contributions cap for 2018/2019 & 2019/2020 is $25,000 and for 2016/2017 it was $30,000 (under 49) or $35,000 (49 & over).
Non-concessional contributions are sometimes called ‘after-tax contributions’. These are generally voluntary contributions and include contributions made by:
- members from after-tax income
- a spouse
Non-concessional contributions are not usually taxed unless you exceed the non-concessional cap of $100,000* for the 2018/2019 & 2019/2020 financial years.
The ATO gives you a choice to withdraw any excess contributions (and earnings) from WA Super however, if you choose not to, a tax of 47% (including the Medicare levy) will apply to the excess.
* Good to know: If you’re under the age of 65 you have the opportunity to bring forward two years’ worth of after-tax contributions. Find out more here.
Investment earnings are taxed at a rate of up to 15%.
But the actual tax payable by WA Super may be less than 15% due to reductions by imputation and foreign tax credits for Australian and international shares. Capital gains tax of 10% is payable by the fund on the gain from the disposal/sale of any investment/asset, subject to the CGT regime, held for more than 12 months.
Investment earnings tax is deducted at the investment option level before crediting rates are applied to your account.
If you’re 60 or over, you can withdraw your super as either a lump sum or as an income stream and not pay any tax.
If you're under your preservation age (outlined on page 2 in the Member Guide), or your benefit consists of two components: a tax-free and a 'taxable' component. The latter is also comprised of two parts; taxed and untaxed, but generally only the 'taxed element' applies for funds like WA Super. See “Tax Components of Super Benefits” below for additional information.
For lump sums (incl. Medicare levy)#
|Age at payment date||Amount of tax payable on the taxed element of the taxable component|
|60 and over||Nil|
|Preservation age to 59||Tax-free up to $210,000 for 2019/2020 and up to 17% on any excess amount|
|Under preservation age||22% (or your marginal tax rate if that is lower)|
# Assumes you are an Australian resident and have provided the Trustee with your Tax File Number. Medicare levy for 2018/2019 is 2%.
If your taxable income was over $180,000 from 1 July 2014 to 30 June 2017, a temporary budget repair levy may have applied.
Tax components of super benefits
A tax-free component is the part of a benefit that is tax-free and does not count towards your assessable (or taxable) income.
A taxable component is the part of the benefit that is taxable. It may include two parts - one where tax has been paid and one where tax has not yet been paid. These are called taxed and untaxed elements respectively.
To work out how your super payout is taxed, you only need to understand how the taxed and untaxed elements of the taxable component are taxed. The tax-free component is not taxable.
- A taxed element is the super that has already had tax paid on it in the fund. It may or may not need to have additional tax paid on it once it is withdrawn. You may still need to include the taxed element in your tax return.
- An untaxed element is the part of your payout that hasn't had any tax paid on it in the fund, but which is still taxable. It must be included in your tax return as assessable income.
No one likes paying more tax than they have to, so please make sure we have your Tax File Number (TFN).
If we don’t have your TFN, the ATO requires us to deduct tax at a rate of 47% from your concessional contributions and we won’t be able to accept any non-concessional contributions from you.
Providing your TFN is optional, but it could save you a lot of money. If you decide to give us your TFN, we’ll only use it for lawful purposes such as tracking down any lost super for you, calculating any tax payable on contributions or payments, reporting to the ATO, co-contribution matching, providing it to another super fund or Retirement Savings Account provider if you’ve rolled your super out.
These purposes may change in the future if required by law.
Find out more
Read our Member Guide to find out more about how your super is taxed.
Alternatively, you can call our friendly Member Services team on 08 9480 3500 for general advice and to assist you with understanding this complex area of the law.