How is super tax-effective?

Earnings from non-super investments are generally added to your taxable income and then taxed at your marginal tax rate. If your marginal tax rate is more than 15% then super can generally be a tax-effective way to save for your retirement. Generally, the higher your marginal tax rate, the more tax-effective superannuation can become.

In addition a tax deduction may also be available to the super fund in respect of your insurance premiums.  The benefit of any tax deduction is generally passed back to you by the super fund.

When deciding whether to invest your money in super, consideration should also be given to your ability to access your super benefits, tax on contributions and withdrawals from super as well as your age when you wish to access your super savings.

While super has some undoubted tax benefits, individual circumstances will always be different. We recommend talking to your financial planner or a tax adviser before making any tax-based decisions about your super.