Super has the benefit of lots of tax concessions and is regarded as one of the most tax effective investment vehicles.

For example, the 15% tax rate that normally applies to your employer’s super contributions (including salary sacrifice contributions by you) maybe lower than the rate you would have paid if you received the money as income through your salary. Generally, most super is concessionally taxed at a flat rate of 15% at three different times:

1. on taxable contributions
2. on earnings
3. on the taxable component of your final payout.

Concessionally means it’s discounted to normal tax rates. This is where the terms concessional contributions and non-concessional contributions come from.

Personal tax and your income

In the 2009/10 financial year, the first $6000 a year you earn is tax free and then you will pay 15% on any income between $6001 and $34,000. From $34,001 to $80,000 the tax rate is $4200 plus 30% on every dollar above $34,000.

You may also have to pay off your HECS / HELP debt. This will automatically come out of your gross salary once you breach the threshold through the Higher Education Loan Program (HELP). For more information about personal tax, your income and repaying your HELP debt, visit the ATO website.

Tax and limits on contributions

The Government has set limits on the amount you can contribute to your super each year at a reduced tax rate. If your contributions exceed this limit, you may have to pay extra tax on the excess contributions. The following tax rates may change, depending on Government limits on contributions and whether the fund holds your Tax File Number (TFN).

Tax on investment returns

While your super is in the Fund, Health Super must pay tax on any investment returns. The current rate of tax is 15% (but it may be less after rebates and credits are taken into account). Health Super manages all the tax requirements relating to super contributions and super investment returns. Any taxes are taken into account when investing super contributions and reporting investment returns to members.

Tax on benefits (other than death benefits)

The tax treatment of benefits paid as a lump sum (from a taxed source like Health Super) is summarised in the following table:

As well as your age, the tax on your super benefit can also depend on:

• if you choose to receive your benefit as a lump sum or as a pension
• if your benefit is received for retirement, death or disability
• whether your benefit is paid to yourself, one of your dependents or non-dependents
• whether the Fund holds your TFN. 

For more information on tax and super visit the ATO website.