Tax & super

As an incentive to help you save for your retirement, superannuation enjoys concessional rates of taxation. Find out what taxes may apply to you.

What taxes apply to my super?

To encourage you to save for retirement, the government offers a number of tax incentives for your super. The following taxes may apply, depending on your personal circumstances.

Contributions tax

A contributions tax is applied to:

• all employer contributions
• any before-tax (salary sacrifice) contributions you make, and
• any amount you roll into UniSuper from an untaxed source such as rollovers from a public sector super fund.

The current contributions tax rate is 15%.

Tax on your investment earnings

Investment earnings are taxed at up to 15%.

In some cases this rate may be less as a result of any tax deductions for which the Fund may qualify. This tax is deducted from the Fund’s investment returns before they are allocated to your accumulation component/account. 

Tax when you withdraw your super

You may have to pay tax when you withdraw your benefit from the Fund. UniSuper will normally deduct any tax before paying your benefit.

• If you are aged 60 or over, your benefit is tax-free, regardless of whether your benefit is paid as a lump sum or pension.
• If you are aged under 60 tax may apply to your benefit payment. Your benefit will be divided into two components: 
  • A tax-free component, and
  • A taxable component.

When you make a lump sum withdrawal of your benefit, the amount you receive will be drawn down from your tax-free and taxable components in proportion to the amount of each component in your entire benefit.

The taxable component will be taxed in the following way:

* A Flood levy of up to 1.0% may also apply for the 2011/12 financial year. For more information, refer to the Flood reconstruction levy in 2011/12 fact sheet.

Tax and limits on contributions

The government imposes limits on the total amount of contributions that you can make to super in each financial year and still receive concessional tax treatment on those contributions.

If you exceed these limits, you may pay a much higher tax rate on any contributions that exceed the limits, or we may refuse to accept contributions in some circumstances.

Each cap applies to all contributions made by you or made on your behalf in a financial year, regardless of how many employers or super funds you have. The government’s co-contribution is not included in either of the caps.

It’s your responsibility to monitor the contributions made into your UniSuper account, and to any accounts you may hold in other super funds, to ensure that you don’t exceed the caps.

Caps on before-tax (concessional) contributions

As long as your combined employer and salary sacrifice contributions (i.e. your total before-tax (concessional) contributions) do not exceed $25,000 in the 2011/12 financial year, these contributions will only incur the 15% contributions tax, provided we have your tax file number (TFN).

The concessional contributions cap will be indexed annually to average weekly ordinary time earnings, and rounded down to the nearest multiple of $5,000.

However, if you exceed the concessional contributions cap, any excess contributions will be taxed at 46.5% (which means that an additional 31.5% is levied on top of the 15% contributions tax already imposed).

A higher annual cap of $50,000 applies if you are aged 50 years or over during the period from 1 July 2009 to 30 June 2012. If you turn 50 during this period you can also access the higher cap for the years up until 30 June 2012. This higher cap will not be indexed.

If you're a Defined Benefit Division member, Notational Tax Contributions apply. Login to MemberOnline for more details or refer to the NTC rates for DBD members fact sheet for more information.

Cap on after-tax (non-concessional) contributions

You can make up to $150,000 of personal after-tax contributions to your super fund  in the 2011-12 financial year.

• If you are aged under 65 this cap can be averaged over a three year period. So you can contribute up to $450,000 in after-tax contributions over a three-year period.
• If you are aged over 65 you will need to satisfy the work test* to make contributions. And, unfortunately, your contributions cannot be averaged out over three years.

Any after-tax contributions above these caps will be taxed at 46.5%.

Please note, any excess concessional contributions also count towards your non-concessional contributions cap. If your contributions exceed both the concessional and non-concessional contributions caps in a financial year, the excess amount could end up being taxed at 93% overall.

* The Work Test: You must have worked for at least 40 hours in a period of 30 consecutive days in the financial year in which any superannuation contributions are made.

Tax on rollovers

If you roll your UniSuper benefit into another super fund no tax is payable.

An untaxed element rolled into UniSuper attracts 15% contributions tax when it is received by the Fund.

Providing your tax file number

It's important to give UniSuper your tax file number (TFN). If you don't, you could end up paying more tax than you need to on your employer's super contributions. And, over time, this could make a big difference to your retirement savings.

It's easy to provide your TFN. simply login to MemberOnline or complete a Tax file number collection form.

Please refer to the relevant Product Disclosure Statement for further details.