Tax on contributions
The tax you pay on your super contributions generally depends on whether the contributions were made before or after you paid income tax, you exceed the super contribution caps or you are a high-income earner.
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Before-tax super contributions (concessional)
The super contributions you make before tax (concessional) are taxed at 15%.
Types of before-tax contributions include:
- employer contributions, such as compulsory employer contributions and salary sacrifice payments made to your super fund
- contributions that you are allowed as an income tax deduction
- notional taxed contributions if you are a member of a defined benefit fund
- unfunded defined benefit contributions
- constitutionally protected funds.
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After-tax super contributions (non-concessional)
The super contributions you make after tax (non-concessional) are not subject to tax.
Types of after-tax contributions include:
- contributions you or your employer make from your after-tax income
- contributions your spouse makes to your super fund
- personal contributions that are not claimed as an income tax deduction.
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Excess contributions tax
There are limits on the amount of before-tax and after-tax contributions you can make each year, and these may vary depending on the financial year and your age.
If you contribute too much to your super, you may have to pay extra tax.
If you exceed the before-tax (concessional) super contributions cap, the excess is included in your income tax return and taxed at your marginal tax rate. You can choose to withdraw some of the excess contributions to pay the additional tax.
If you exceed the after-tax (non-concessional) super contributions cap, you can choose to withdraw the excess contributions and any earnings. The earnings are then included in your income tax assessment and taxed at your marginal rate.
If you don’t withdraw the earnings, the excess is taxed at 47%.
You must lodge an income tax return if you exceeded your non-concessional contributions cap in the 2016–17 financial year, and you may have to pay extra tax.
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Division 293 tax for high-income earners
Division 293 tax is an additional tax on super contributions if your combined income and super contributions are more than the threshold. From 1 July 2017 this threshold is being reduced to $250,000.
Division 293 tax is 15% of your taxable concessional contributions above the $250,000 threshold.
If you are a member of a defined benefit fund, Division 293 tax may be calculated on notional contributions which are not capped.
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Tax paid on super contributions depends on whether they were made before or after you paid tax, you exceed super contributions cap or you're a high-income earner.