A clear-cut guide for individuals by Yogi Group
When it comes to planning your financial future, two key components to get familiar with are superannuation (“super”) and how tax affects it. At Yogi Group, we believe in giving you the knowledge to make smart choices. Here’s a breakdown of how tax impacts your super contributions, investment earnings, withdrawals and more.
1. How Super Contributions Are Taxed
When your employer pays into your super fund (or you “salary sacrifice” into it), that amount is taxed at 15% inside the fund.
There are some important nuances you should know:
- If you earn $37,000 or less and qualify, you may receive the “low-income super tax offset” (LISTO) which gives you a refund of the contributions tax paid.
- If your combined income + super contributions exceed $250,000, you may face an extra “Division 293 tax” of 15% on your concessional contributions.
- If you contribute from your after-tax income (non-concessional contributions), typically you don’t pay contributions tax inside the fund.
Key takeaway: Know your income bracket and contribution type — it affects how much tax you’ll pay upfront on your super.
2. Tax on Super Fund Investment Earnings
Once your super fund invests your contributions (e.g., in shares, property, bonds), the earnings inside the fund are also taxed — usually at 15%.
Because these earnings have tax applied before you ever touch them, you’re getting a form of tax-efficient growth compared to some other savings options.
3. Tax When You Withdraw Your Super
How and when you access your super can drastically change the tax outcome.
If you’re aged 60 or over (and withdrawing from a taxed fund):
- If you take a regular income stream (i.e., periodic payments), it’s usually tax-free.
- If you take a lump sum – tax-free (from a taxed fund) as well.
If you’re under age 60 or withdrawing from an untaxed fund:
- Regular income stream: You may pay tax.
- Lump sum withdrawal: There may be tax up to 17% (including Medicare levy) on amounts above the low-rate cap (currently $260,000) or your marginal tax rate, whichever is lower.
If you haven’t reached your preservation age (the age before which you generally can’t access your super):
- A lump sum could attract tax of around 22% (including Medicare levy) or your marginal rate.
4. What Happens When Someone Dies?
Super funds often pay out a death benefit to a beneficiary. The tax payable depends on factors like: whether you are considered a dependent for tax purposes, the taxable vs tax-free components of the benefit, whether you withdraw as a lump sum or income stream.
Why This Matters for You — And How Yogi Group Can Help
Understanding these tax rules is vital for getting the most out of your super and ensuring you don’t pay more tax than necessary. Here’s how Yogi Group supports you:
- We help assess your contribution strategy: Are you making concessional or non-concessional contributions?
- We review your fund’s performance and tax efficiency.
- We plan your withdrawal strategy in retirement: How to access your funds in the most tax-efficient way.
- We monitor changes in tax rules, caps and thresholds, so your plan stays current.
- monitor changes in tax rules, caps and thresholds, so your plan stays current.
So conclude it as…
Superannuation may seem complicated — but with the right understanding, it becomes a powerful tool for your financial future. Whether you’re building your nest egg, balancing contributions now, or planning how to access your savings later — it pays to be informed.
For more tailored advice, contact Yogi Group’s team of professionals and let us help you integrate your super-tax strategy into your wider financial plan.
📝 Disclaimer: This blog is for general informational purposes and does not constitute personal financial or tax advice. Always seek advice based on your individual circumstances.