Superannuation


Superannuation is a form of long-term saving to provide retirees with a pension or lump sum in retirement. As an incentive the Australian Government provides tax concessions to people that save for retirement via the Superannuation system. The most important concession is that superannuation can now be withdrawn tax free after the age of 60 whether by lump sum or by pension.

The underlying performance of your superannuation is driven like any other asset, and possible investments in superannuation include cash, fixed interest, shares and property. It is important that you pay attention to your superannuation investments to ensure that you have structure and control over your financial position.

Eligibility to contribute to Superannuation:

Anyone under age 65 may contribute to superannuation. From age 65 the super fund member must have been gainfully employed for at least 40 hours in a period of not more than 30 consecutive days in the financial year in which the contribution is made. You cannot make contributions to superannuation after age 75.


Superannuation Tax Concession:
  • Earnings in superannuation funds are taxed at a rate of 15% rather than your marginal tax rate plus the Medicare levy;
  • Capital gains are taxed at 10% provided the asset has been held by the superannuation fund for more than a year.
  • Superannuation funds may be converted into a tax free income stream upon retirement, such as an Account Based Pension.
  • Withdrawals may be made tax free after age 60 with no maximum withdrawal.

Employer Contributions

Employer contributions to an eligible superannuation fund on behalf of employees are fully tax deductible to the employer up to the cap which is $50,000 per annum for the bulk of employees.

The cap is $100,000 for super fund members over the age of 50 at the 30th June. This concession lasts until the 30th June 2012.

Contributions Tax of 15% is payable on the contribution by the superannuation fund.

Salary Sacrifice Contributions

Salary sacrifice means foregoing wage income and contributing the funds to superannuation instead. This additional contribution is over and above the minimum 9% that the employer is required to contribute and comes directly from the employees’ pay – it is not an addition to the employee’s salary.

This strategy provides employees with an excellent opportunity to make tax-effective superannuation contributions when comparing the marginal tax rates with the superannuation entry tax rate of 15%.

Non-Concessional Contributions

Non Concessional contributions used to be referred to as undeducted contributions and mean that post tax contributions are made. No tax deduction is claimed and no tax is incurred in the superannuation fund.

There is a cap of $150,000 for non concessional contributions. You can also take advantage of the bring forward provisions which allow you to contribute $450,000 in any one year provided you do not make any contribution for the following two years.

Superannuation is a complex area. Ethos Financial can take the stress out of superannuation. Please contact our office for more information.