Where tax meets the dollar
Follow one dollar from a pay packet to retirement, and this page finds six points where tax can touch it. Each point below says what the source says, and whose words they are: Moneysmart’s summaries are reported as Moneysmart’s, and the ATO’s as the ATO’s.
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Going in before tax
Moneysmart calls before-tax payments into super concessional contributions, and says a 15% contributions tax is paid on them, a rate that may be lower than the tax most people pay on their income. The employer’s super guarantee counts as one of these contributions.
Higher earners pay more. Moneysmart says that where a person’s income and concessional contributions together come to more than $250,000 (the figure as stated on 8 October 2026), they pay Division 293 tax, which adds another 15%.
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Personal contributions and a deduction
Money a person puts in from their own after-tax pay can sometimes be claimed as a tax deduction, if they meet the rules, and Moneysmart notes that claiming one can change how those contributions are treated. For self-employed people, Moneysmart says, super contributions can generally be claimed as a deduction.
The order of steps matters. Before claiming, the person must tell their fund, using the ATO’s notice of intent form. Personal contributions with no deduction claimed are non-concessional contributions, and count against that cap instead.
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Help from the government on the way in
Moneysmart describes three government measures for people on lower incomes, each with conditions of its own:
- a low income superannuation tax offset of up to $500 a year, which someone earning $37,000 or less may receive;
- a government co-contribution, which may be added when a low to middle-income earner makes after-tax contributions;
- a tax offset that may be claimed for contributing to a spouse’s super, where the spouse earns under $40,000 or does not work.
The ATO describes the co-contribution as the government matching some or all of a low or middle-income earner’s personal contributions.
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Over a cap
From 2013–14 onwards, the ATO says, excess concessional contributions are included in taxable income and taxed at the person’s marginal rate. Where excess non-concessional contributions are released, an associated earnings amount, approximating what the excess earned in the fund, is included in assessable income. The caps themselves, with their years, are in the guide to contribution caps.
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Inside the fund, and between funds
On capital gains, the ATO says the order matters: any capital losses from other assets come off capital gains first, and only then is the discount applied. Where the discount applies, complying super funds reduce their capital gain by 33.33%, where an individual entitled to it reduces the remaining gain by 50%.
Moving super from one fund to another keeps it inside. The ATO’s words: “No tax is payable on the amount rolled over to another complying super fund until you withdraw your super (when tax may apply).” The route matters, though. If a benefit is paid to the person first and only then into another fund, the ATO treats the payment as having left the super system: it is a super benefit rather than a rollover, and may be taxed. Where a rollover includes an untaxed element above the untaxed plan cap amount, the fund transferring it withholds the tax payable on the excess.
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Coming out
There is a lifetime limit, the transfer balance cap, on the most a person can transfer into one or more tax-free retirement accounts.
Early access is taxed too. Writing about using super to pay home loan arrears, the National Debt Helpline says such a withdrawal is taxed, that the rate depends on age and other factors, and that on average about 22% tax is deducted from a lump sum withdrawn by someone under their preservation age.
Taking super outside the rules
Moneysmart warns that getting at super outside the rules can bring extra tax and penalties, and cost a person their retirement savings. For self-managed funds, the ATO says that where a member takes super illegally, with no condition of release met, the amount counts as that member’s assessable income, even if it is put back in the fund later. The lawful ways out are in when super can be accessed and early release.
When super is paid after a death
Two bodies of law share this ground. The ATO puts it this way: “Superannuation law sets out who a death benefit is payable to, while taxation law sets out how a death benefit is taxed.” Under tax law, the ATO says, a child over 18 must have been financially dependent on the person who died to count as a dependant, which means having relied on them for necessary financial support.
The ATO’s page on superannuation death benefits covers the tax side in more detail.