Superannuation

Taxation of Contributions and Returns

All contributions to a superannuation fund by an employer, or indeed by an individual out of before tax dollars (also known as "salary sacrifice") attract a Government tax of 15%. This remains the case despite the wide ranging changes ot the superannuation system announced by the Government in the 2006 Federal Budget - as does the tax (at concessional levels) on investment earnings within a superannuation fund.

We will shortly update this section in light of the Budget announcements, but in the interim the excerpt below from the Treasurer's Press release provides a good summary of the major planned changes - particularly the removal of tax on pensions paid to people over 60:

"Under the Government’s plan, Australians aged 60 and over who have already paid tax on their superannuation contributions and earnings would not pay tax on their superannuation benefits from 1 July 2007. The removal of benefits tax would sweep away the complexities retirees face when taking their benefits. As superannuation benefits would no longer be assessable income, there would be an incentive to continue to work while drawing down on superannuation as people would pay less tax on their work income.

The plan would also abolish reasonable benefit limits (RBLs), introduce new streamlined rules for contributions and give individuals greater flexibility as to how and when they wish to draw on their superannuation in retirement. The ability to make deductible superannuation contributions would also be extended to age 75. The self-employed would be able to claim a full deduction for their superannuation contributions as well as being eligible for the Government co-contribution for their personal post-tax contributions."

Complete the Superannuation Inquiry form