Tax and Your Super

Superannuation is a tax effective way to save for your retirement. Following is a summary of the taxation imposed on superannuation and when it applies. The summary only considers the position of the Australian taxpayer. Because the Australian taxation system is complex and different investors have different circumstances, you should seek professional taxation advice before investing in or continuing to hold Superannuation.

Concessional Contributions

Concessional (Employer, Salary Sacrifice, Self Employed) contributions for which a deduction has been claimed are taxed at 15% in super - rather than being taxed at your marginal tax rate if you receive it as salary. Such contributions are also free from Fringe Benefit Tax.

The maximum you can contribute is $25,000 of concessional contributions to your account each financial year and pay the super tax rate of 15%. The $25,000 cap will be indexed to Average Weekly Ordinary Time Earnings, but will only increase in $5,000 increments.  If you are aged 50 or more, you can make concessional contributions up to $50,000 each financial year until 30 June 2012.

The $50,000 cap during the transitional period will not increase.

If you wish to claim a tax deduction for a personal superannuation contribution (if you are predominately self-employed for example), you need to notify us of your intention to do so by completing the tax deduction claim form that will be sent to you after 30 June each year.

Non-concessional Contributions

You do not pay contributions tax on Non-concessional (personal) Contributions, Spouse Contributions or the Government Co-contribution.

You can contribute up to $150,000 in Non-concessional contributions each financial year. $450,000 for a three-year period (for under 65’s).

Tax When You Rollover Other Superannuation into MAP Superannuation 

Generally no tax is payable on monies rolled over from other superannuation funds unless the amount contains an ‘untaxed element’. Any untaxed element will be taxed at 15%. Typically, this will only apply if you are transferring from an untaxed super fund.

Tax When you Leave MAP Superannuation to Retire

If you take your superannuation as a lump sum, the payment will be broken into two components, an exempt component and a taxable component.
The exempt component comprises what were previously known as the pre-July 1983 component, the CGT exempt component, the post-June 1994 invalidity component, concessional component and undeducted contributions. Pre 1983 components of a super benefit became a fixed dollar amount as at 30 June 2007. This “crystallised” amount is a fixed component that will not change in the future and forms part of the exempt component.

Taxation treatment of lump sum benefits (2009/10)
Age 60+
All components are tax free if you are aged 60 or over.
Age 55¹ to 59
If aged 55 to 59 the exempt component is tax free. The taxable component is tax free up to the threshold ($150,000 in 2009/10). Amounts above the threshold are taxed at 15% (plus Medicare levy)
Under age 55¹
If you are aged under 55 the exempt component is tax free and the taxable component is taxed at 20% (plus Medicare levy).  There is no tax free threshold.

¹ For those born after 1/7/1960, age 55 is replaced with your preservation age.

While Your Money is Invested

The earnings on your investment are taxed at a maximum rate of 15%. Dividend imputation and other tax credits significantly lower this rate for investments in MAP Superannuation.
We pay the tax prior to crediting earnings to your account.

Tax on Spouse Contributions

There is no tax paid on spouse contributions. If the spouse receiving the contribution is earning $10,800 or less, a maximum tax offset of $540 per annum applies. Entitlement to the rebate reduces when income exceeds $10,800 and phases out completely when assessable income reaches $13,800 (2009/10). The rebate is applied to the annual tax return of the spouse making the contribution.

Tax on Total and Permanent Disablement (TPD) Benefits

If you are aged 60 years or over and satisfy the TPD condition of release, your superannuation benefit will be paid to you tax-free.
If you are 59 or younger, your benefit will be made up of a tax-free component and taxable component. See “Taxation treatment of lump sum benefits".

Tax on Terminal Illness Benefits

If you are diagnosed with a terminal illness you may receive your superannuation benefit as a tax-free lump sum. Two medical practitioners (at least one specialist) must certify in writing that you are terminally ill and are not expected to live beyond 12 months.

Tax on Death

A lump sum payment to your estate may be taxed, depending on whether a dependant or non-dependant receives the benefit. Your personal legal representative is responsible for tax arrangements when your estate pays the benefit to your beneficiary(ies).  Tax on benefits paid from the Trustee depends on a number of factors including:

• The proportion of concessional and non-concessional contribution components;
• Whether the death benefit includes insurance proceeds;
• Your age at the time of your death; and
• The dependency status of your beneficiaries. 

Benefits paid from the Trustee to dependents will generally be tax free. Dependants (for tax purposes) are defined as:

• a spouse¹;
• former spouse¹;
• a child less than 18¹;
• any person who had an interdependency relationship immediately before death; or
• any other person who was dependent on the member immediately before death.

1  In December 2008, legislation was passed making it easier for super funds to recognise same-sex relationships. Effective from 1 July 2008 The definition of 'spouse', 'child' and 'relative' in the 'SIS Act' and other super legislation has been extended to include same-sex partners and their children.

Tax deductions for the self-employed

If you are self-employed, contributions to your MAP Superannuation account are tax deductible up to the relevant concessional caps.
These Concessional Contributions are taxable at 15% in the super fund. Self employed and substantially self-employed persons (where less than 10% of total assessable income is from employment) are entitled to the same deduction limits up to the contribution caps. 

If you wish to claim a tax deduction for a Self-employed Contribution you need to request an ATO Section 290-170 form. If you have made a self-employed contribution(s) we will send you this form after 30 June each year for you to complete and return.

What is my preservation age?

Preservation age is the government-specified age at which you can gain access to your super benefits, provided you have permanently retired from the workforce. Your preservation age depends on your date of birth.