• Superannuation are savings for retirement. Your employer has tax and superannuation obligations if they employ workers.
  • If you are eligible for compulsory super guarantee contributions, your employer must pay them into a complying super fund. You can contribute to your own super, and you may be eligible for government contributions.
  • When you retire and reach the preservation age, you can withdraw your super, either as a lump sum or retirement income stream (or a combination of both)

Superannuation in Australia

Superannuation is money set aside by your employer over your lifetime to provide for your retirement. For most Australians, payments begin when you commence your first job. These contributions from your employer are known as super guarantee contributions or concessional contributions. You can also contribute your own funds to your super account.

Superannuation Funds

Super funds manage your funds to provide a return on investment for your retirement. They invest in shares, property and managed funds. To incentivise investment, complying super funds receive more favourable tax treatment than individuals and companies.

You can choose a super fund if your super is paid under a federal award (also known as a notional agreement preserving state award), are employed under another award that doesn’t require super support and you are not employed under an industrial agreement. You do not have to choose a super fund if you do not want to – your employer can choose for you.

Personal Contributions

You can make personal contributions to your super account by making your own contributions. A salary sacrifice arrangement with your employer can also boost your employment. The amount of your personal contributions will affect your taxation.

Key Issues

  • If you have more than one super account (often a result of working for more than one employer), you may want to consider combining them into one super fund so you pay only one set of fees and costs
  • Generally, you cannot access your super until you retire or meet a condition of early release. Be wary of offers to withdraw your super early as this may be an illegal super scheme.
  • If you are leaving Australia permanently or are a temporary resident working in Australia, different superannuation laws apply to you.

Accessing Superannuation Benefits

You can receive your super as a super income stream, as a super lump sum or as a combination of both. Australians can access super funds when they reach the preservation age and retire, or reach the preservation age (this depends on when you were born). There are very limited circumstances where you can access your super benefits early. This includes severe financial hardship, certain compassionate grounds, a terminal medical condition or permanent or temporary incapacity.

You may be required to pay a super surcharge depending on the income you received. A superannuation contributions surcharge is a tax on certain contributions made to a super fund while a termination payments surcharge is a tax on certain components of an employment termination payment that is taken in cash.

Tax Deductions

You may be able to claim a tax deduction for contributions you make to your superannuation if you are not an employee. This applies mostly for workers of a personal business (self-employment), investments, government pensions or allowances, super or a foreign source.

When you withdraw your super, you will be subject to tax. This will depend on your preservation age and the age you will be when you receive the payment, whether the money in your super account is taxable or tax-free, and whether you will receive the payment as an income stream or lump sum. Different tax treatments also apply to superannuation payments made to former temporary residents.

Unclaimed Super

Super is unclaimed if the member has reached the eligibility age and the super fund has not received an amount for the member in the last two years. A super fund will hold the amount and attempt to make contact within five years. Otherwise, the amount will be deemed unclaimed. ATO-held super includes amounts paid to the ATO by employers, super funds or the government on your behalf that needs to go into your super.

Frequently Asked Questions about Superannuation

Q: How do bilateral social security agreements work?
A: In certain countries, if you work overseas temporarily for your Australian employer, super guarantee contributions must be paid in Australia as well as in the country you are working in.

Q: What happens if I have more than one super account?
A: If you have more than one super account, consider combining them into one super fund, so you pay only one set of fees and costs.

Q: Why is my super fund is asking for my TFN?
A: You should give your tax file number to minimise paying extra income tax on certain contributions, and you may miss out on super co-contributions.

Q: What are salary sacrifice super contributions?
A: Salary sacrifice is an arrangement where you agree to forego part of your future salary or wages in return for your employer providing benefits of a similar value.

Q: What is a super income stream?
A: Payments in this form will be received in a series of regular payments made over an identifiable period. It must meet the minimum payment standards.

Q: What is a Statement of Account?
A: A Statement of Account (SOA) provides a record of the superannuation amounts held by the ATO on your behalf. It provides a list of transactions processed during the statement period and shows current account balances and any amounts due and payable for each superannuation type.

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