Tax & Super

In Super there are a few different ways tax applies.

1. Tax on payments you take from super (once you have access).

If you are between your preservation age & 60, there is tax payable on taxable components of your super. But if you’re over 60, all income is non-assessable non-exempt (NANE) income. This is just another way of saying the money will be tax free.

 Taxable Components in Super

The taxable components of your super balance comes down to how your super balance grew. In most cases you will have more money in super that is taxable.

This is because the type of contribution your employer is contributing to your super fund is taxable.

You might have tax free components in your super fund as well which generally come from additional personal contributions you make after-tax. i.e., money you’ve already paid tax on.

2. Tax on Super Fund Earnings

Whilst you’re working or in the accumulation phase the earnings within the super fund are taxed at 15%.

If your super balance grows because of earnings while you are in the accumulation phase, the taxable component of your balance will increase.

When you retire and start a pension from your super fund (i.e. enter pension phase), earnings are taxed at 0%.

You could have a mix of both, especially in an SMSF if you have members at different life stages. But as the SMSF accountant we work out what income is assessable and exempt from tax.