Australian Superannuation – Ten Must-know Facts About Super Rules

Here is a handy guide for 10 must know facts about Australian superannuation rules:

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Superannuation Guarantee (SG)

Under Superannuation Guarantee laws, it’s mandatory for employers to contribute to a super fund for each employee. The rate for SG contributions now stands at 9.5%. It makes your concessional contributions cap.

Tax on concessional (before-tax) contributions

The employer’s compulsory SG contributions and any before-tax contributions that you make (concessional contributions) are taxed at a maximum of 15% when super contributions are made. If your annual adjusted taxable income is greater than $250,000, concessional contributions get an additional 15% tax.

The special tax rate on investment earnings

Applies to earnings on super fund investments too (at less than 15%), but is exempted if a retirement phase pension is drawn from this account.

Co-contribution

 If you make non-concessional (after-tax) contributions to your super fund, depending on income level, the government may also put some tax-free money into your fund.

Contributions caps

Your annual super contributions amount is limited. If the contribution exceeds the limit, and you don’t withdraw the excess, a penalty tax (excess contributions tax) should be paid.  

Fund choice

Generally, you can choose the super fund you want your employer to contribute to or the employer will choose it.

Investment choice

 Generally, you can decide how you want your money invested. If not, a default investment option would be considered.

Member reporting

Your super fund must send you regular (at least annual) reports on the performances of the fund and your account.

Preservation

 You generally can’t withdraw your money (or benefits) from the super fund until you retire or after your preservation age; this may differ.

Tax-free for over-60s

 When you retire on or after 60, you pay no tax on superannuation benefits, unless you’re a long-term public servant. When you receive a super pension in retirement phase (a superannuation income stream) from your super fund, the earnings on the assets that finance your retirement phase pension are exempt from tax, even if you retire before 60.

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