Taxing issues

To encourage people to use super to save and invest for retirement, the government provides a number of tax incentives. For example, investment earnings on super are taxed at a low (concessional) rate and you pay no tax on investment earnings on an income stream, such as Telstra Super RetireAccess. Read on to find out more about tax and your super.

Contributions

Contributions tax

Any employer contributions up to the pre-tax contributions limit are subject to a 15% contributions tax. This tax is deducted from your account at the end of each quarter, or if you leave the fund during the quarter the tax will be deducted at that time.

Post-tax contributions up to the post-tax contributions limit are not subject to any further tax.

 More information is available on contribution limits for defined benefit members
 More information is available on contribution limits for accumulation members

Excessive contributions tax

The ATO will monitor all pre-tax and post-tax contributions made to your Telstra Super account on your behalf. The ATO will notify you if your contributions exceed the caps. Contributions in excess of the caps are taxed as follows:

  • Tax on excessive pre-tax contributions: 45% (plus Medicare levy). May be paid directly to the ATO or you may instruct the Trustee to release funds to meet the liability.
  • Tax on excessive post-tax contributions: 45% (plus Medicare levy). Cannot be paid directly to the ATO, you must nominate a super fund to release monies to meet the liability.

Investment returns

Investment returns applied to your super account are before tax and investment management fees. Investment returns are taxed at the low (concessional) rate of 15%. This tax is taken out as part of the calculation of unit prices. Investment returns are tax-free for Telstra Super RetireAccess members.

Tax on lump sum withdrawals

Generally your balance may consist of both non-preserved and preserved components. Preserved super cannot be withdrawn until you reach preservation age.

The current tax rules on lump sum withdrawals from a taxed source:


Age Tax on taxable component
60+ Nil
55-59 First $150,000 tax-free.
Amounts above $150,000 taxed at 15% (plus Medicare levy).
Under age 55 (current 
preservation age)		 20% (plus Medicare levy).

Tax on payments from an income stream, such as Telstra Super RetireAccess, are treated differently to ordinary lump sum withdrawals. For more information on how income streams are taxed, select Telstra Super RetireAccess in the My Super section of this website and read the information on Tax and my income stream. 

Tax-free components

From 1 July 2007, to ensure tax components decrease proportionately, any withdrawals from your account will include tax-free and taxable components relative to your account balance. For example, if your taxable component is equal to 70% of your account balance, then 70% of your withdrawal will be made from your taxable component.

For income stream payments, these components are as at commencement date of the income stream.

Spouse tax offset

If a contribution is made to an eligible spouse's account by 30 June each financial year, the contributing spouse may be able to claim a tax offset of up to $540 pa.

Contributing spouses may be able to claim an 18% tax offset on the first $3,000 of contributions made each financial year to their eligible spouse’s account, provided their spouse’s income is $10,800 or less. Contributing spouses may be eligible for a partial offset if the eligible spouse’s income is over $10,800 but not greater than $13,800 a year. The offset on the contributions (up to $3000) is reduced by one dollar for every dollar that income exceeds $10,800 pa, to the maximum of $13,800, when the offset no longer applies.

The following conditions must be met to be eligible:

  • the receiving spouse must meet the criteria for an eligible spouse.
  • the contribution must be made post-tax.
  • both you and your spouse were Australian residents when the contributions were made.
  • you and your spouse were not living separately and apart on a permanent basis.
  • the sum of the eligible spouse's income - the total of their assessable income, reportable fringe benefits and reportable employer superannuation contributions was less than $13,800.
  • if the recipient is aged 65-70 they must be gainfully employed for at least 40 hours in a period of not more than 30 consecutive days in the current financial year.

 Use our Spouse tax offset calculator to determine you or your spouse's potential eligibility
 To contribute to your spouse's account, download a 
     Member and Spouse Contribution form (50kb)
 To find out more about tax and your super, visit the Australian Tax Office website