Tax in superannuation
by Wealth Know How in SMSF
Superannuation is concessionally taxed. This means that the government gives incentives through the tax system to encourage people to save for retirement.
The investment earnings of a super fund are taxed at 15%. The lower rate of tax means your money can grow faster than investments held outside the super system, which may be taxed at a higher rate.
- sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
Published on 06 Mar 15
-
-
Venezuela tension heats up
Duration 03:16
-
Aussie dollar surprises market
Duration 03:10
-
Markets climb as investors watch US healt...
Duration 02:31
-
-
Superannuation is concessionally taxed. This means that the government gives incentives through the tax system to encourage people to save for retirement.
The investment earnings of a super fund are taxed at 15%. The lower rate of tax means your money can grow faster than investments held outside the super system, which may be taxed at a higher rate.Sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
-
Venezuela tension heats up
Duration 03:16
-
Aussie dollar surprises market
Duration 03:10
-
Markets climb as investors watch US healthcare bill
Duration 02:31
The investment earnings of a super fund are taxed at 15%. The lower rate of tax means your money can grow faster than investments held outside the super system, which may be taxed at a higher rate.
Capital gains made by a super fund are also taxed at 15%, unless the fund owns the asset for at least 12 months, in which case a CGT discount may be applied and the effective capital gains tax rate for super funds may be as low as 10%.
Franking credits from fully franked share dividends may be used in a self-managed super fund to offset the 15% tax on super contributions as well as tax on other investment income. In broad terms, the difference between the company tax rate and the super fund tax rate means that a dollar of fully franked dividend income in a super fund shelters a further dollar of the super fund’s income.
Where a super fund has moved into pension phase – all the fund’s assets are in the pension account, and it’s paying a pension to its members – the fund’s tax rate on investment earnings and capital gains becomes zero. And because a super fund in pension phase pays no tax on its earnings or capital gains, the benefits of franked dividends are even greater, because all franking credits are fully refunded to the super fund, in cash.
Contributions to super, both employer and salary-sacrificed contributions - up to the contribution caps are only taxed at 15%. If you are self-employed, you can claim tax deductions for super contributions (up to certain limits) and these contributions may also incur a 15% tax rate.
If you withdraw your super benefits on or after the age of 60, the benefit won’t be taxed, if you satisfy a condition of release – such as retirement, or starting a transition-to-retirement pension. This is the same whether you take your benefit as a lump sum or a superannuation pension. So if you’ve managed to put away enough savings in super, you can enjoy a tax-free income in retirement.
Currently at age 65, whether a person is working or not, super can be taken out tax-free, whether as a lump sum or an income stream.