What taxes on investments do I pay?

Tax on investments

Generally you pay tax on investment income as well as if you make a gain on the disposal of your investment. Whether the gain is taxed on revenue or capital account (eligible for a CGT discount) depends on various factors including the reasons for acquiring the investment (such as for long term profit). The amount of tax you pay will also depend on your other income and your marginal tax rate.  

Tax on Super Investment

Your super is taxed at four points:

1. Tax on contributions
   
   Employer contributions are taxed at 15% when they are paid into a fund, including both the compulsory Superannuation Guarantee and any salary sacrifice contributions you make.
   
   Your own contributions from after-tax income are not taxed when they are paid into a fund. However, a 15% contributions tax will apply for self-employed investors who claim a tax deduction for these contributions.
   
2. Tax on investment earnings
   
   Income received by your super fund from investments is taxed at a rate of 15%.  Capital gains from disposal of investments within the fund if held for greater than 1 year, is taxed at 10% (eligible for the 33 1/3 CGT discount). In some cases, the effective tax rate is less than 15% because the tax payable on fund earnings may be decreased by allowable deductions and tax credits.
   
3. Tax on investment withdrawal
   
   New rules from 1 July 2007 mean that your super benefits from a taxed fund are tax-free for people over age 60, whether taken as a lump sum or as a pension. If cashing out, taxation will be applicable for those aged 55 to 59, but once an individual reaches age 60, there is no tax on exit.
   

4. No TFN tax

   If your super fund does not have your Tax File Number (TFN) pre-tax contributions such as your employer contributions will incur  an additional 31.5% tax if your TFN has not been quoted to the fund by the end of the financial year in which the contribution was made. The fund is able to obtain a refund of the tax if your TFN is provided within the next 3 years.