How your super is taxed
These pages contain general information about tax rates and thresholds for super contributions and benefits.
The main thing to understand about how super is taxed is that it used to be taxed at three points - on the way in as contributions, inside the fund as earnings and on the way out as benefits. However, for most people past the age of 60, super is now effectively tax-free.
If you have more than $1.8 million in superannuation the portion above this threshold will be taxed but only at 15%. But regardless of how and at what stage superannuation is taxed, it is still taxed at extremely concessional levels compared to other types of investment and this is what makes superannuation so special.
Limits, thresholds and special conditions nonetheless still exist around superannuation tax and it is important that employers, their employees, consumers and financial advisers properly understand these rules or consult with someone who does.
For example, while an individual or company (on behalf of its employees) may contribute any amount into superannuation, there is a limit to which those contributions attract a tax deduction. Moreover, the government requires all employers to provide a minimum level of superannuation for their employees, called the super guarantee, which is currently equivalent to 10.5% of an employee's wage or salary.
Some employers may, of course, contribute more and the government has even established a bonus scheme for low-income earners.
To find out more about how the government has changed the superannuation taxation rules to make it even more attractive than it was, see ato.gov.au/super. To help you get started, we have prepared the following taxation information tables.
THRESHOLD SUMMARY
| Financial year | Charge percentage | |
| 2014/15 to 2020/21 | 9.5% | |
| 2021/22 | 10% | |
| 2022/23 | 10.5% | |
| 2023/24 | 11% | |
| 2024/25 | 11.5% | |
| 2025/26 and later years | 12% | |
| Maximum contribution base | Amount in a quarterly contribution period | |
| 2022/23 | $60,220 | |
| 2023/24 | $62,270 | |
| Superannuation contribution caps | ||
| Concessional 2022/23 | $27,500 | |
| Concessional 2023/24 | $27,500 | |
| Total superannuation balance on June 30, 2023 | Non-concessional (2023/24) | |
| Under $1.9 million | $110,000 | |
| $1.9 million and over | Nil | |
SUPER LUMP SUM TAX
| Taxed in the fund: | |||
| Age | Lump Sum | Income Stream | |
| Age 60 and over | Tax-free | Tax-free | |
| Preservation age to age 59 | 0% up to the low rate cap ($235,000 for 2023/24).
Amount above $235,000 is subject to tax up to maximum rate of 15% plus Medicare levy |
Marginal tax rates and tax offset of 15% of the taxable component. | |
| Below preservation age | Subject to tax up to maximum rate of 20% plus Medicare levy | Marginal tax rates, with no tax offset. | |
| Source: The Australian Taxation Office | |||
| Untaxed in the fund: | |||
| Age | Lump Sum | Income Stream | |
| Age 60 and over | Subject to tax up to a maximum of 15% on amount up to the untaxed plan cap amount of $1.705 million.
Top marginal rates applies to amounts above $1.075 million. |
Marginal tax rates and tax offset of 10% of element untaxed in the fund. | |
| Preservation age to age 59 | Subject to tax up to a maximum of 15% plus Medicare on amount up to the low-rate cap amount of $230,000.
Amount exceeding $235,000 up to the untaxed plan cap amount ($1.65 million) is taxed at a maximum rate of 30% plus Medicare. Amount exceeding $1.65 million is taxed at the top marginal rate. |
Marginal tax rates, with no tax offset. | |
| Below preservation age | Amount up to $1.705 million is taxed at a maximum rate of 30% plus Medicare.
Amount exceeding $1.705 million amount is taxed at the top marginal rate. |
Taxed at marginal rates, with no tax offset. | |
| Death benefit payments to non-dependants: | |||
| Age of deceased | Type of death benefit | Age of Recipient | Taxation treatment |
| Any age | Lump sum | Any age | Element taxed in the fund is taxed at 15%. Element untaxed in the fund is taxed at 30% |
| Any age | Income stream | Any age | Cannot be paid as an income stream. Income streams that commenced before July 1, 2007, are taxed as if received by a dependant. |
| Death benefit payments to dependants: | |||
| Age of deceased | Type of death benefit | Age of Recipient | Taxation treatment |
| Any age | Lump sum | Any age | Tax-free (not assessable, not exempt income). |
| Aged 60 and over | Income stream | Any age | Element taxed in the fund is tax-free. Element untaxed in the fund is taxed at marginal rates with offset of 10% of the element untaxed in the fund. |
| Below age 60 | Income stream | Above age 60 | Element taxed in the fund is tax-free. Element untaxed in the fund is taxed at marginal rates with offset of 10% of the element untaxed in the fund. |
| Below age 60 | Income stream | Below age 60 | Element taxed in the fund is taxed at marginal rates with offset equal to 15% of the amount. Element untaxed in the fund is taxed at marginal rates. |
| Age | Component subject to PAYG withholding | Tax treatment | |
| Superannuation lump sum benefit (terminally ill recipient) | Any | None | Nil |
SUPER INCOME STREAM TAX
| Age of recipient | Element taxed in the fund of a super income stream |
| Age 60 or above | Tax free |
| Under 60 but at or above preservation age | Taxed at marginal tax rates, 15% tax offset. |
| Under preservation age | Taxed at marginal tax rates with no tax offset (15% tax offset available if disability superannuation benefit). |
| Age of recipient | Element untaxed in the fund of a super income stream |
| Element untaxed in the fund of a super income stream | Taxed at marginal rates, with a 10% tax offset. |
| Under 60 but at or above preservation age | Taxed at marginal rates, with no tax offset. |
| Under preservation age | Taxed at marginal rates, with no tax offset. |
PERSONAL MARGINAL INCOME TAX RATE
| Taxable income | Tax (2023-2024) |
| 0 - $18,200 | Nil |
| $18,201 - $45,000 | $0 + 19% > $18,200 |
| $45,001 - $120,000 | $5092 + 32.5% > $45,000 |
| $120,001 - $180,000 | $29,467 + 37% > $120,000 |
| Over $180,000 | $51,667 + 45% > $180,000 |
| *The above rates do not include the Medical levy of 2% | |
| Medicare levy surcharge | ||||
| Family structure | Taxable income | |||
| Singles | Less than $93,000 | $93,001 - $108,000 | $108,001 - $144,000 | $144,001 or more |
| Families (combined) | Less than $186,001 | $180,001 - $216,000 | $216,001 - $288,000 | $288,001 or more |
| Medicare Levy | 0% | 1.00% | 1.25% | 1.50% |
| * Income thresholds are typically indexed on 1 July with Average weekly ordinary time earnings (AWOTE). | ||||
LOW INCOME TAX OFFSET (LITO)
| Lower income threshold | Higher income threshold | Max offset |
| $0 | $37,500 | $700 |
| $37,501 | $45,000 | $700 - [(TI - $37,000) x 0.05] |
| $45,001 | $66,666 | $325 - [(TI - $45,000) x 0.015] |
| Over $66,667 | Nil | |
LOW AND MIDDLE INCOME TAX OFFSET (LMITO)
| Lower income threshold | Higher income threshold | Max offset |
| $0 | $37,500 | $700 |
| $37,501 | $45,000 | $700 - [(TI - $37,500) x 0.05] |
| $45,001 | $66,666 | $325 - [(TI - $45,000) x 0.015] |
| More than $66,667 | Nil | |
GOVERNMENT CO-CONTRIBUTIONS
| Income year | Lower income | Higher income | Max benefit |
| 2023/24 | $43,445 | $58,445 | $500 |
LOW INCOME SUPERANNUATION TAX OFFSET (LISTO)
| Amount payable 2022-2023 | Maximum LISTO contribution | Maximum adjusted taxable income* to be eligible | Income test |
| 15% of concessional contributions up to $3333 | $500 | $37,000 | 10% or more of total income is derived from business or employment |
| * Adjusted taxable income = taxable income + adjusted fringe benefits total + total foreign income + total net investment loss + tax free pension or benefit + reportable superannuation contributions. | |||
AGE RESTRICTIONS ON CONTRIBUTIONS
| Type of contribution | Under 67 | Over 67 but under 75* | 75 and over |
| Super guarantee contributions | Yes | Yes | Yes |
| Voluntary employer contributions | Yes | Yes | No |
| Personal concessional contributions | Yes | Subject to work test | No |
| Non-concessional contributions | Yes | Yes | No |
| Spouse contributions | Yes | Yes | No |
| Government co-contributions | Yes | Yes, if under age 71 at the end of financial year** | No |
| * Includes on or before 28 days after the end of the month in which the member turns 75 years old. ** To be eligible for the government co-contribution, you will need to be aged under 71 at the end of financial year. |
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MINIMUM DRAWDOWNS APPLYING IN 2023-2024
| Age | Standard drawdown | 2020-21 annual percentage factor |
| Under 65 | 2% | 4% |
| 65-74 | 2.5% | 5% |
| 75-79 | 3% | 6% |
| 80-84 | 3.5% | 7% |
| 85-89 | 4.5% | 9% |
| 90-94 | 5.5% | 11% |
| 95 or older | 7% | 14% |
SOCIAL SECURITY ENTITLEMENTS
| Aged pension: | |
| Family situation | Maximum benefit ($ per fortnight)* |
| Single pensioner | $1064 |
| Partnered pensioner | $802 |
| Couple separated due to ill health (each) | $1064 |
| As of March 20, 2023. * Pension figures include the pension supplement and the energy supplement. Source: Services Australia |
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