Tax savings on investment earnings
The benefits of making pre-tax contributions into your super to lower your PAYG tax is discussed in detail on the contribution pages under My super. But you also need to consider the tax savings of super investment earnings.
Investment earnings from super are taxed at a maximum rate of 15%, while investment earnings from sources outside of super are taxed at your Marginal Tax Rate (MTR) of up to 45% plus Medicare. This makes super a very attractive investment vehicle from a tax perspective, particularly if you don’t need to access your investment straight away or are close to retirement.
A saving of 15% or more on investment earnings may not seem much, but depending on your investment, this can really start to add up. The following graph compares a lump sum of $20,000 invested in super and outside of super at different Marginal Tax Rates over a 10 year period, with no other contributions, just investment earnings and tax. There are many variables which would affect the outcome of this illustration, please see the assumptions for full details.
Impact of tax rates
