You’ll find more details at www.ato.gov.au.
Tax on contributions to a superannuation fund
You don’t pay tax on the contributions you make into HESTA from income on which you have already paid tax (after-tax income). However, if you exceed the cap on non-concessional contributions you’ll pay the top marginal tax rate plus the Medicare Levy on those contributions.
A tax is paid from your account on:
- the contributions your employer makes for you
- any contributions paid from income on which tax has not been paid (for example, through salary sacrifice arrangements with your employer)
- any contributions you paid for which you received a tax deduction (these are called concessional or deductible contributions)
- if you exceed the cap on concessional contributions made by your employer you’ll have to pay an additional 31.5% tax (including the Medicare levy) on the excess contributions.
Personal Super Plan Members
Any concessional (tax deductible) contributions paid by self-employed members are also subject to 15% tax, paid from your account.
If you exceed the cap on concessional contributions you’ll have to pay an additional 31.5% tax (including the Medicare Levy) on the excess contributions.
HESTA calculates the tax on the net contribution after allowing for our administration fee and any disability and death insurance you may have through HESTA.
Tax on money transferred into, or out of, a fund
There is no tax if you transfer money from one Australian super fund to another, unless the amount transferred contains an untaxed component (e.g. a termination payment direct from an employer, or a payment from certain super funds for government employees).
An untaxed component attracts 15% tax.
A higher tax rate also applies to transfers over $1 million from an untaxed scheme to a taxed scheme.
Payments from an overseas fund to an Australian fund are treated as a personal, non concessional contribution. No tax is payable on the contribution but the cap still applies.
Note that tax may apply to investment earnings accrued in the overseas fund when your benefit is paid from that fund more than six months after you become an Australian resident.
Tip: You should think about seeking professional tax advice before you transfer super from an overseas fund.
Tax on investment earnings of the Fund
Tax on investment earnings of the Fund
Investment earnings of the Fund are taxed at a maximum rate of 15%. Most Australian capital gains are taxed at a discounted rate of 10%. Imputation tax credits on any share dividends may reduce the actual tax rate further. HESTA allows for investment tax before declaring interest rates.
GST
GST does not apply to super contributions, rollovers, interest applied to members’ accounts or benefits paid. However, GST does affect HESTA’s operating costs.
Tax on payments from a superannuation fund
You may have to pay tax when you draw money from HESTA. The amount you pay will depend on your circumstances, including your age, how long you have been in a super fund and how your super benefit is paid:
- you pay no tax on super benefits received if you’re aged 60 and over, where they have already been subject to tax on contributions and investment earnings (this applies to HESTA)
- you pay no tax on the part of your super benefit that consists of the contributions you made from your after-tax income after 30 June 1983, or on the portion of your benefit that accrued before 1 July 1983. HESTA is required to calculate the latter amount as a fixed dollar figure by 1 July 2008. These two amounts form part of the tax-free component of your super
- you pay no tax on the first $145,000 * of your total benefit less the tax-free component if you withdraw it from super after you reach preservation age, but before age 60. You may pay 15% tax plus Medicare levy on any amount over $145,000
- if you’re under your preservation age you pay 20% plus Medicare levy on your entire benefit less the tax-free component
- if you use your super benefit to receive a regular income from a super fund (a pension or annuity), special tax concessions apply. See www.ato.gov.au for details.
- if your benefit is paid out to you as an eligible temporary resident who is leaving Australia permanently, higher tax rates may apply. Contact the Australian Taxation Office for details.
- no tax is paid on death benefits paid to a dependant (as defined in the tax legislation). The taxable component of a lump sum paid to a nondependent is taxed at 15%.
* These figures for 2007/08 are indexed based on Average Weekly Ordinary Time Earnings (AWOTE – see www.abs.gov.au for details)
Tax benefits available for super contributions
For after-tax contributions:
- under the co-contributions scheme, the Federal Government currently contributes $1.50 for each $1.00 of personal contributions made by eligible people with assessable incomes plus fringe benefits up to $30,342 (indexed annually)
- the maximum available co-contribution of $1,500 per year decreases progressively to $0 for incomes over $60,342
- the Australian Taxation Office will work out if you are eligible for a co-contribution using information from your tax return and your super fund and will pay the amount directly to your super account where it must generally remain until you retire.
People under 18 years of age can’t claim a deduction for personal contributions unless they earn eligible business or employment income that year.
Personal Super Plan Members
If you’re self-employed:
- you can claim a tax deduction for some of your contributions
- tax deductions reduce the income on which your tax is calculated.
Vist the Australian Tax Office website for more infomation and to download the documents you need to make a claim.
Giving us your Tax File Number
Why HESTA asks for your TFN
HESTA is authorised to collect your Tax File Number (TFN) under the Superannuation Industry (Supervision) Act 1993 (SIS). This notice is to confirm the conditions under which your TFN will be used if you have already provided, or are in the process of providing, your TFN to HESTA.
- Supplying your TFN is voluntary, and it is not an offence if you choose not to provide it.
- HESTA is required by law to take the necessary steps to properly safeguard your TFN, and our intention is to use it only for lawful superannuation purposes*. HESTA may disclose your TFN to another superannuation provider if your benefits are transferred, unless you instruct HESTA in writing not to disclose your TFN to any other fund.
Advantages of providing your TFN to HESTA include:
- HESTA will be able to accept all types of contributions to your account and the ATO will find it easier to determine any entitlements you have to a government co-contribution on any personal after-tax contributions you make
- you will not have to pay the top marginal tax rate (plus the Medicare Levy) of 46.5% on contributions made to your super account/s
- no additional tax will be deducted when you start withdrawing your super benefits (other than the tax usually deducted from super)
- it will make tracing different super accounts in your name much easier, so you can combine all your super accounts into one (if you wish) and receive all super benefits due to you when you retire.
You can find further information on TFNs by calling:
- Australian Prudential Regulation Authority (APRA) - 1300 131 060
- Australian Taxation Office (ATO) - Superannuation - Hotline 13 10 20
- Tax File Number Enquiries - 13 28 61
- Office of the Federal Privacy Commissioner - 1300 363 992