Misconceptions about super and taxes
Many people have a good idea of what super is and how much of their money goes into it. But there are some gaps when it comes to the basics, such as when you can access it and how super is taxed. Read on for a cheat sheet summary of ten top things to know about your super.
Many Australians know how much of their salary or wages their employer must pay in compulsory super contributions but there’s a lot of confusion when it comes to critical information, such as the age at which you can access your super, how women fare on average within the super system, and how your super is taxed.
Q1. What is super?
Super is money put aside throughout your working life for you to live on when you retire from work.
Q2. How much of your salary or wage does your employer currently have to put into your super?
Your employer must pay into super on your behalf, also known as the Superannuation Guarantee, this is currently 11.5%. This goes up to 12% on 1 July 2025.
Q3. How are the investment returns on my super taxed?
The total taxable income a fund receives is taxed at up to 15% (including two-thirds of any realised capital gains).
Q4. What types of employees aged 18 or over must be paid compulsory super by their employer?
Full-time, part-time and casual employees must be paid the Superannuation Guarantee by their employer.
Q5. How does the average Australian woman’s super balance compare with that of the average Australian man when approaching retirement?
According to the Australian Government’s 2024 Status of Women Report Card, women generally retire with about 25% less super than men, as women are disadvantaged by a range of structural issues. These include that they earn less than men on average and are more likely to take time out of the workforce to have children or care for relatives.
Q6. From what age can you access your super after retiring?
You can actually access your super from age 60 if you’ve retired from a job (and it’s tax-free).
It’s also possible to access super under other circumstances: for instance, if you meet the release conditions related to experiencing financial hardship or if you’ve turned 60 and you want to keep working but you set up a transition to retirement pension.
Q7. How much super would you need to retire comfortably as a single homeowner in Australia, according to the Association of Superannuation Funds of Australia’s (ASFA) Retirement Standard^?
ASFA nominates $595,000 as the amount a single homeowner should have in their super when they retire to enjoy a comfortable retirement, rising to $690,000 for a couple.
Q8. Can you make extra contributions to your super?
Yes, there are a number of ways you can contribute extra to your super on a pre-tax and after-tax basis.
There are some limits to the amount you can contribute each year, also known as contribution caps, but making extra contributions can make a big difference to your super balance over time, as well as having the potential to reduce your tax.
Pre-tax, or concessional contributions are only taxed at 15% but you can only contribute up to $30,000 a year (including compulsory employer contributions). You may also be able to contribute more than this if you have not fully utilised your concessional cap in any of the previous five financial years.
After-tax, or non-concessional, contributions are capped at $120,000 a year. If you’re under age 75 any time during a year, you may be able to apply the ‘bring-forward’ rule. This may allow you to make up to three years’ worth of non-concessional contributions at any point during a three-year period, depending on your total superannuation balance at the end of the previous financial year.
Q9. Who gets your super if you die?
Depending on the rules of your fund, your super can be paid directly to your beneficiaries or to the executor of your estate, to be paid in accordance with your will (or the laws of intestacy if you die without a will).
However, a common misconception is that super is automatically considered part of someone’s estate – in fact, it’s important to nominate who you want your super to go to. This is because super is ‘held in trust’ for you by the trustee of your super fund. Death benefit nominations work like a will, giving you a level of control over what happens to your super balance when you’re gone. If you don’t complete a benefit nomination, your super fund may decide who your super is passed on to.
Q10. What are some ways you can better understand the role your super can play in your financial future?
- Check out the website of your super fund.
- Visit ASIC’s Moneysmart website for more information and calculators on super.
- Contact a financial adviser for personal, ongoing financial advice.
Source: Colonial First State
