How much tax you pay on your super contributions and withdrawals depends on a variety of factors. The process takes into account your total super amount, your age, and the type of contribution or withdrawal you make.
How are super contributions taxed?
The money that you contribute to your super account through your employer is taxed at 15%, and this is the same with salary sacrificed contributions. But there are exceptions to this:
- If you earn $37,000 or less, then the tax will be paid back to the super account due to the low-income super tax offset (LISTO)
- If your income and super contributions add up to more than $250,000, then you are also required to pay an additional 15% Division 293 tax.
Any after-tax super contributions (non-concessional contributions) are not taxed further.
How are super withdrawals taxed?
How much tax you pay on withdrawals depends on whether you withdraw as a super income stream or a lump sum. Since this can be a convoluted process, it may be beneficial to approach an advisor and clarify any questions you may have before you withdraw money.
What about beneficiaries?
If someone dies, then their super money will go to their beneficiary. This is known as a super death benefit. As a beneficiary, the tax you pay on the death benefit is dependent upon:
- The tax-free and taxable components of the super
- Whether you’re a dependant for tax purposes
- Whether you take the benefit as an income stream or a lump sum.