What Taxes Apply?
What tax applies to superannuation?
Let's look at the tax that applies at the three main stages:
When you contribute
At the point of investing your money in superannuation, any contributions made from your after-tax income (including spouse contributions) are not taxed. These are referred to as Undeducted contributions.
If you're self-employed, and claiming a tax deduction for the contributions, or, if your employer is claiming a deduction for contributing to superannuation for you, a maximum of 15% tax must be paid on these contributions.
While your money's invested
Once your money is invested in superannuation, the fund pays a maximum of 15% tax on any income and profits it makes on its investments. This is probably a much lower rate of tax than you pay on any income and profits from investments you have outside superannuation.
When you withdraw your money
The tax you pay on withdrawal depends upon factors such as your age, when you started work or contributing to superannuation and the type of contributions that you made.
- Undeducted contributions (your own contributions after July 1983 for which you haven't claimed a tax deduction) are repaid to you tax free.
- Post June-83 taxed element (the balance of your benefit, excluding undeducted contributions) is tax free providing you cash out after 60.
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