Super tax rates

4.1 Tax on super contributions

4.1.1 Concessional contributions
Concessional contributions are contributions where a tax deduction has been claimed, either by an individual or by an employer.
TABLE: Concessional contributions – 2015/16 and 2016/17 income years
Concessional (before tax)
Types of contributions included Employer contributions
Salary sacrifice
Deductible personal after-tax contributions by a self-employed person
Contribution threshold* Age 49 and under: $30,000
Age 50 and over: $35,000
Tax on contributions up to the threshold 15%
Plus
For individuals earning over $300,000: Division 293 tax, if you choose to pay from super
Tax on excess amounts breaching the cap Your marginal tax rate less a 15% tax offset
*The concessional threshold is indexed to average weekly ordinary time earnings (AWOTE) and rounded down to the nearest $5,000 increment.

WARNING
Concessional contributions which exceed the concessional threshold also count towards the non‑concessional threshold unless withdrawn.

4.1.1 Non-concessional contributions
No tax is payable on a non-concessional contribution so long as this is within the specified threshold.

TABLE: Non-concessional contributions – 2015/16 and 2016/17 income years
Non-concessional (after tax)
Types of contributions included Personal voluntary contributions
Spouse contributions
Contribution threshold $180,000 (unless a prior bring forward rule applies)
Tax on contributions up to the threshold Nil
Tax on excess amounts breaching the cap 49%*
*Includes Medicare Levy and Budget Repair Levy (applicable for 2014/15, 2015/16, 2016/17 income years)

4.2 Tax on withdrawals from super
A benefit withdrawn from super generally comprises a tax-free and taxable component. The amount withdrawn will be proportionately split between the tax-free and taxable components.
Amounts withdrawn from age 60 generally are tax-free. If you cash out a lump sum benefit before age 60, tax may apply.

TABLE: Taxation of lump sums withdrawn from super – 2015/16 and 2016/17 income years
Age Component of super benefit Maximum tax rate
Age 60 and above Taxable Nil
Tax-free Nil
Preservation age to age 59 Taxable
No tax up to $195,000** (low rate cap)
15%* on balance
Tax-free Nil
Below preservation age Taxable 20%*
Tax-free Nil
*Plus Medicare Levy. The additional temporary Budget Repair Levy may also apply if the member’s income is over $180,000 (applicable for 2014/15, 2015/16, 2016/17 income years).
**The $195,000 low rate cap is indexed annually in line with Average Weekly Ordinary Time Earnings ‘AWOTE’. This is a lifetime limit.

Note: Different taxation rates to the above in the following circumstances:
• the amount withdrawn contains an untaxed element (a higher rate of tax applies as this component arises from contributions that have not incurred contributions tax into super; commonly from a government public sector super scheme)
• death benefits
• payments received upon terminal medical conditions
• disability super benefits.

4.3 Higher rates of tax applicable to super
Certain income of super funds and contributions incur tax at higher rates.

TABLE: Higher rates of tax applicable to super income and contributions
Medicare Levy Temporary Budget Repair Levy
Non-arms length income Top marginal tax rate No Yes
No-TFN contributions – Top marginal tax rate
Less
Tax rate already paid by fund No Yes
Non-complying fund Top marginal tax rate No Yes
Excess contributions Top marginal tax rate Yes Yes

Temporary Budget Repair Levy
The Temporary Budget Repair Levy was announced in the 2014 Federal Budget. It is an additional 2% tax on individual incomes over $180,000 and also increases a number of other super tax rates. The levy applies from 1 July 2014 for the following financial years:
• 2014/15
• 2015/16
• 2016/17

4.4 Division 293 tax – additional tax for high-income earners
An additional tax of 15% is imposed on concessional contributions for those individuals earning more than $300,000 in the financial year. This additional tax is commonly referred to as Division 293 tax.