Tax on superannuation – part one

You’ve no doubt heard that super is one of the most tax-effective ways to save for your retirement. But do you know why, and how?

In part one of this topic, we demystify how tax works in superannuation during the accumulation phase.

The accumulation phase of super is the period where your super balance is accumulating, and the contributions made during this time generally cannot be accessed until you reach your preservation age, or meet a condition of release (which you can read about in our Accessing your super article).

Why is super tax-effective?

To encourage Australians to save for their own retirement over the course of their working lives, the government applies significant tax concessions on super.

How does tax get charged on super?

Tax is charged on super in three stages.

1. Contributions

There are tax concessions on specific contributions going in to super.

2. Earnings on investments

For many people, the earnings generated by your super investments are usually taxed much lower at a maximum rate of 15% compared to tax rates outside of super which can be up to a marginal tax rate of 45%.

(Low-income earners may be eligible for a super tax offset. Read more about the low-income earners tax offset at the ATO website.)

3. Retirement income

Depending on your circumstances, it’s quite likely that you’ll be charged little or no tax on any retirement income you receive from your super.

When you understand the unique tax structure of super, you can be in a better position to make decisions about contributions, investments, and withdrawals. 

See more below.

Hot tip

When you provide your Tax File Number (TFN) to your super fund and employer, it means you’ll be able to make non-employer contributions to your super. And your super fund won’t take extra (government-mandated) tax out of your super contributions.

Related content

Take advantage of the available tax concessions on super contributions.

Learn about contributing to your superannuation and the caps that apply.

We explain the range of strategies you can use to help grow your super in our boost your super guide


How tax on super works during the accumulation phase

1. Tax on money going into super

There are many ways you can contribute to your super. The type of contribution will determine how much tax (if any) that will be charged. 

Concessional contributions

  • Before tax contributions
  • Taxed at 15% (or 30% if your salary is >$250,000)


Contributions from your employer:

  • Superannuation Guarantee (SG) – 10.5% (2022/23)
  • Salary sacrifice contributions.

Contributions you make yourself:

  • Contributions as a self-employed person 


  • Contributions if you’re aged under 75 years


  • you claim a tax deduction for a personal contribution (eligibility criteria applies. Refer to for more information).

The annual concessional contributions general cap is $27,500.

Your cap may be higher than the general cap if the ‘carry forward’ rules apply to you. Refer to the ATO website for more information on 'carry forward' rules.

If you make contributions in excess of your cap, you may need to pay additional tax.

Non-concessional contributions

  • After-tax contributions
  • Taxed at 0% (on balances <$1.7 million)


  • Any contribution you make with after-tax money and you don’t claim a tax deduction.
  • Spouse contributions.

The general non-concessional contributions cap for most people is $110,000 (eligibility criteria applies.  Refer to

If you make contributions in excess of this, you may need to pay tax.

If you have a super balance greater than $1.7m (2022/2023), your non-concessional contributions cap will be nil.

Other contributions

  • Taxed at 0%


See the ATO website for more information about contribution types, caps, and exceptions.

2. Tax on money in super

Super investment earnings will be taxed at a maximum rate of 15% while you are accumulating super.

There is no tax on investment earnings if you are receiving income stream payments from a superannuation pension (this excludes a transition to retirement income stream).

Additional tax may apply if you exceed your personal transfer balance cap when commencing a pension. Refer to the ATO website for more information about transfer balance caps.

3. Tax on money going out of super

When you access your super, you may have some tax deducted. How much depends on why you’re withdrawing, how you’re withdrawing, and your age. See below.

Note, to access your super, you will need to have met your preservation age, or meet a condition of release (which you can read about in our Accessing your super article).

Under preservation age^

  • 0% on tax-free component plus
  • 22% (incl. Medicare levy) on the taxable component when paid as a lump sum


  • Marginal tax rate if paid as pension payments.

Under 60 but reached preservation age^

  • 0% on tax-free component 


  • Marginal tax rate if paid as pension payments.
  • When paid as a lump sum, 0% for first $230,000 (2022/23) and 17% (incl. Medicare) or your marginal tax rate (whichever is lower), for amounts above $230,000.

Over 60^

0% whether paid as a lump sum or as pension payments.

What is my taxable component?

This is generally made up of the concessional contributions you make to super plus super fund earnings.

What is the tax-free component?

This is generally made up of any non-concessional contributions you make to super.

Why don’t I pay tax on non-concessional contributions?

Because they’re after-tax contributions, meaning you’ve already paid tax on this money at your marginal tax rate.

Are the tax rules the same for all super funds?

Yes. Whether you use a retail fund, have a self-managed super fund, or an industry fund, the tax rules for super are the same.

Do I have to report any investment income generated by my super?

No. When your investments in super grow, any applicable tax is paid by your super fund, so you don’t need to include this in your personal taxable income.

Things you should know

^ When the benefit is paid from a fund which hasn’t been subject to taxation (e.g. some state government funds), tax is paid at various concessional tax rates. Refer to ATO website for more about withrawing your super and paying tax.

This information is current as at 1 July 2022. 

The information is prepared by BT Funds Management Limited ABN 63 002 916 458 (BTFM) the trustee of: BT Super for Life, BT Super for Life Westpac Group Plan and BT Super part of the superannuation fund Retirement Wrap ABN 39 827 542 991.

This information has been prepared as general advice only and does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness, having regard to your personal objectives, financial situation and needs before acting on it. Read the Product Disclosure Statement (PDS) to see if these products are right for you by visiting Any tax considerations are general statements based on current tax law. You should obtain your own tax advice about your personal circumstances.

BTFM is a member of the Westpac Banking Corporation ABN 33 007 457 141 (Westpac) group of companies. An investment in a BTFM product is not an investment in, deposit with or any other liability of Westpac, any division of Westpac or any other company in the Westpac Group. Past performance is not a reliable indicator of future performance. Westpac and its related entities do not stand behind or otherwise guarantee the capital value or investment performance of the product or any related assets of the product.

The Government has set caps on the amount of money that you can add to superannuation each year on both a concessional and non-concessional tax basis. There will be tax consequences if you breach these caps.  For more detail, speak with a financial adviser or visit the ATO website. 

© BT – Part of Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.