Unfortunately, Australian superannuation system is complex and the rules have been subjected to many changes over the years.
This page is not intended to cover all superannuation issues in depth. Rather, its purpose is to provide some key data and valuable pointers
Maximum tax-deductible contributions (concessional contributions)
$25,000 per year
Maximum non-tax deductible contributions
$100,000 per year
Those under age 65 can aggregate 3 years of contributions and contribute up to $300,000 at one time.
Who can contribute?
Anyone under age 65
Those between age 65 and 75 can contribute provided a work test is passed (minimum of 40 hours in any 30 day period during the year of contribution).
For those over 75 contributions are limited to mandated employer contributions, such as Superannuation Guarantee contributions.
Taxation of Superannuation Funds
A superannuation fund in accumulation mode pays tax on concessional contributions and investment income.
There is no tax on non-concessional contributions.
The tax rate is 15%, but capital gains on disposal of assets held for more than 12 months are effectively taxed at 10%.
A superannuation fund in pension mode pays zero tax on its investment income
Access to Superannuation
Earliest retirement age for superannuation purposes is 55 for those born before 1 July 1960, increasing to 60 for those born after 30 June 1964.
Once retirement age is reached, a pension can be commenced even if the fund member is still working, subject to prescribed minimum and maximum values.
Once age 65 is reached, there is no restriction on making withdrawals.
Recommended Superannuation Funds
We only recommend two types of superannuation funds:
Low cost, zero commission, not-for-profit industry funds.
Self-managed superannuation funds.
Self-managed Superannuation Funds
A SMSF has the following advantages:
Control over the investment strategy
Control over the administration of the fund
Ability to invest in practice premises or other property
Ability to enter into borrowing arrangements
Costs can be lower than public offer funds
Depending on how funds are invested, the cost of running a SMSF are largely fixed. A SMSF must pay accounting and audit fees plus a fee to the ATO, but these costs should not be influenced by the size of the fund. Rather, the accounting and audit fees should only be influenced by the complexity of the fund’s investment strategy. By way of contrast, a public-offer fund’s fees are percentage based. The more super you have, the more you pay. A person with $1million in a public offer fund will pay 10 times the fees charged to a person with $100,000 even though there is no more work to administer an account with an extra zero on the end of the number.
ASIC has recently issued a release stating that $200,000 is the minimum balance before it normally would make sense to set up a SMSF. We agree with that $200,000 will be an appropriate minimum balance in most circumstances.
Further Reading:
Trish Power’s SuperGuide website contains a wealth of information on various superannuation topics. It can be accessed here: