How is super taxed?

There are generally three stages at which your super might be subject to tax.

1. When contributed to your account

Concessional Contributions – Employer Contributions

Concessional contributions include:

• Employer Contributions (including contributions made under a salary sacrifice arrangement)
• Personal Contributions claimed as a tax deduction by a self-employed person

These contributions are generally taxed at 15% provided that the concessional contribution cap is not exceeded. The concessional contribution cap for persons aged up to 50 for 2011/12 financial year is $25,000. This can be a tax effective way to contribute to super, because most people's marginal tax rate is much higher than 15%.

For those aged 50 or over a transitional cap of $50,000 (not indexed) will apply during the transitional period (30 June 2010 until 30 JUne 2012). This will further reduce from $50,000 to $25,000 from 1 July 2012. The Government has announced changes that, if passed by parliament, will permanently increase the concessional contributions cap to $50,000 for individuals who have total super blances below $500,000 and are 50 years or over.  

Contributions that you make (from your after-tax salary) are generally not subject to any tax when paid into Cbus. However, there are limits on the amount of after tax contributions (also known as non-concessional contributions) you can make. The non-concessional contributions cap is 6 times the concessional cap or a $150,000 a year. If you are under 65 years of age you are able to 'bring forward' two years worth of non-concessional contributions allowing up to $450,000 over a three year period to be contributed, without an additional tax liability. Any amounts you contribute over these limits will be taxed at 46.5%.

Any part of your personal contribution that you later claim as a tax deduction will be taxed at 15% and be reclassified to concessional contributions. Any concessional contributions over the capped limit will be taxed an additional 31.5%.

If you have more than one fund, contributions made to all your funds during a financial year are added together and count towards the contribution limits.

To find out more about claiming a tax deduction for your personal contributions click here.

Cbus cannot accept non-concessional contributions from you unless you have provided a valid TFN to the fund.

2. The investment earnings on your account

The investment earnings on your Cbus' account are taxed at up to 15% (it’s often much less due to tax rebates and credits). This compares well with the individual marginal tax rate that applies to earnings on other investments you might have (for example, a rental property, or shares).

3. When you withdraw money from your account

The amount of tax on payments from super can depend on your age, the amount of your payment, and the reason for your payment. To find out what taxes apply to your super benefit see the super and tax table below. Contact our Service Centre on 1300 361 784 if you're unsure.

If you are looking to transfer your super into an Income Stream, see the Cbus Super Income Stream taxation section.
This information has been provided as a guide only, and is not a substitute for professional taxation advice. As the tax rules in relation to superannuation can be complex we suggest that you seek professional advice before making any decisions. For questions about tax on superannuation, we strongly advise you to contact the Australian Tax Office (ATO) on 13 10 20.

Super and Tax Table