Tax and super
June 28 2017
Contains comprehensive information regarding the tax treatment of super.
Tax can be complicated and rates and thresholds are subject to change. It's important to know the impact of tax on your super
Here you can find more information about providing your Tax File Number to ESSSuper, tax considerations when you are building your super and things to consider when you're ready to access your super.
Providing your Tax File Number (TFN)
ESSSuper is authorised by tax laws to request members' Tax File Numbers (TFNs). If you provide your TFN, ESSSuper will use it for lawful purposes only. It is not an offence not to provide your TFN and you are not obliged to by law.
Providing your TFN may have the following advantages:
- Your Accumulation Plan account will be able to accept all types of contributions.
- Tax on contributions to your Accumulation Plan account will not increase as a consequence of not providing your TFN.
- No additional tax will be deducted when you start receiving pension payments (other than what may ordinarily apply).
- It is easier to trace different superannuation accounts in your name so you receive all your superannuation benefits when you retire.
- We may also use your TFN to identify multiple accounts and consolidate them where permitted under law.
Use this form to provide us with your TFN.
Tax file number notification (PDF 139.8KB)
Tax when building your super
Contribution caps and tax
The Federal Government sets limits (called contribution caps) on the amount of contributions made to all of your super accounts in a financial year. If you exceed these caps, extra tax applies.
Two separate caps apply for super contributions:
Concessional contributions: such as compulsory employer contributions (SG), salary sacrifice contributions and notional employer contributions (for defined benefits) or contributions for which a tax deduction has been claimed.
Non-concessional contributions: generally personal contributions made from after-tax income and other contributions not subject to tax.
The table below shows tax that applies to contributions if we have your Tax File Number (TFN). If we don't have your TFN, all contributions are taxed at 49%1 (including Medicare levy).
|Type of contribution
(e.g. employer SG and salary sacrifice)
- 15% on amounts up to $30,0002 (or $35,0002 if you are aged 49 or over on 30 June 2014) a year.
- Where your combined income including concessional contributions exceeds $300,000 p.a., an additional 15% tax will apply to concessional contributions relating to the income exceeding $300,000.
- 0% on amounts up to $180,0002,3 a year
- 49%1 on amounts above $180,0002,3 a year
Tax above contribution caps
The ATO provide a great short video explaining what happens if you go over the super contribution caps.
Any excess concessional contributions above the cap will be included in your assessable income and if left in the fund - taxed at your marginal tax rate (plus an interest charge).
Any excess concessional contributions above the cap will also be counted towards your non-concessional contributions cap.
A notice of excess non-concessional (after-tax) contributions will be sent to you by the Australian Tax Office (ATO) and must be used to authorise release of these excess contributions from your super account. It is important to stay under this cap because of the tax penalty that applies.
Tax on investment earnings
Investment earnings in the accumulation phase are generally taxed at 15%. The rate may be less due to tax credits or other rebates. Tax is deducted from investment earnings before net earning rates are declared and credited (or debited) to your account.
Note: This does not impact defined benefits you may have with ESSSuper. There is no tax on the investment earnings of eligible income streams.
Tax when accessing your super
Tax on rollovers
If you rollover your benefit to another complying fund, you do not pay lump sum tax at the time of the rollover (unless your benefit includes an untaxed taxable amount). You may pay tax when you receive your benefit as cash.
Tax on benefits after aged 60
If you’re aged 60 or over both your superannuation pension (or income stream) payments and lump sum superannuation payments are generally tax free.
Tax on benefits before aged 60
If you’re under 60, tax may be withheld from your payment if your benefit contains a taxable component (see table below - 2015/16). The rates below assume you have provided your TFN. All rates include the Medicare levy of 2%.
|If under preservation age, taxed up to a maximum rate of 22%. Between preservation age and 59, the first $195,000* is tax free and the balance is taxed up to a maximum rate of 17%.
|If under preservation age:
Between preservation age and 59:
- First $1.395 million taxed up to a maximum rate of 32%.
- Amount above $1.395 million taxed at 49%.
- First $195,000 taxed up to a maximum rate of 17%.
- Amount between $195,001 and $1.395 million taxed up to a maximum rate of 32%.
- Amount above $1.395 million taxed at 49%.
Learn more about tax when accessing super
FACT SHEET: Access to super + tax (PDF 66.6KB)