How much tax you pay on your super contributions and withdrawals depends on:

• your total super amount
• your age
• the type of contribution or withdrawal you make

If you inherit someone’s super after they die, the person’s super fund pays you a super death benefit. You may have to pay tax on some of this benefit.

Because everyone’s situation is different, it’s always best to get advice about tax matters. Contact the Australian Taxation Office (ATO) or speak to us.

How super contributions are taxed

Money paid into your super account by your employer is taxed at 15%. So are salary-sacrificed contributions, also known as concessional contributions.

There are some exceptions to this rule:

• If you earn $37,000 or less, the tax is paid back into your super account through the low-income super tax offset (LISTO) .
• If your income and super contributions combined are more than $250,000, you pay Division 293 tax, an extra 15%.

If you make contributions from your after-tax income – known as non-concessional contributions – you don’t pay any contributions tax.

See the ATO website for more information about how much tax you’ll pay on super contributions.

Smart tip: To avoid paying extra tax on your super, make sure you give your super fund your Tax File Number.

How super investment earnings are taxed

Earnings on investments within your super fund are taxed at 15%. This includes interest and dividends, less any tax deductions or credits.

How super withdrawals are taxed

The amount of tax you pay depends on whether you withdraw your super as:

• a super income stream, or
• a lump sum

Everyone’s financial situation is unique, especially when it comes to tax. Make an informed decision. We recommend speaking to us before you decide to withdraw your super.

Super income stream

A super income stream is when you withdraw your money as small regular payments over a long period of time.

If you’re aged 60 or over, this income is usually tax-free.

If you’re under 60, you may pay tax on your super income stream.

Lump sum withdrawals

If you’re aged 60 or over and withdraw a lump sum:

• You don’t pay any tax when you withdraw from a taxed super fund.
• You may pay tax if you withdraw from an untaxed super fund, such as a public sector fund.

If you’re under age 60 and withdraw a lump sum:

• You don’t pay tax if you withdraw up to the ‘low rate cap’, currently $260,000.
• If you withdraw an amount above the low rate cap, you pay 17% tax (including the Medicare levy) or your marginal tax rate, whichever is lower.

If you have not yet reached your preservation age:

• You pay 22% (including the Medicare levy) or your marginal tax rate, whichever is lower.

When someone dies

When someone dies, their super is usually paid to their beneficiary. This is called a super death benefit.

If you’re a beneficiary, the amount of tax you pay on a death benefit depends on:

• the tax-free and taxable components of the super
• whether you’re a dependent for tax purposes
• whether you take the benefit as an income stream or a lump sum

Contact us today if you have any questions.

 

 

Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at Moneysmart .
Important note: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete and accept no liability except where required by law.” .
Important
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Self-managed superannuation funds (SMSFs) have long been associated with older Australians and small business owners looking for greater control over their retirement savings.

But recent data suggests the sector is undergoing a quiet transformation.

Alongside tax reforms and persistent compliance challenges, younger people are slowly moving into the SMSF space. While 85 per cent of SMSF members are 45 years or older, there’s been significant growth in members aged between 25 and 34 years from just 2.4 per cent two years ago to around 10 per cent now.ⁱ

Almost 8,000 new SMSFs were established in the three months to the end of March 2025 with the number of new members increasing by 13,000. Australia’s SMSFs hold an estimated $1.02 trillion in assets with 26 per cent invested in listed shares and 16 per cent in cash and term deposits.

A new tax era

The new Division 296 super tax, due to apply from 1 July 2025, is aimed at those with total superannuation balances exceeding $3 million. An extra 15 per cent tax will apply to earnings on the portion of a member’s balance above $3 million, effectively lifting the tax rate on those earnings to 30 per cent.

What makes Division 296 particularly contentious is the inclusion of unrealised gains. For example, a share portfolio the SMSF holds has seen positive returns. Trustees may face tax liabilities on paper profits, even if assets haven’t been sold. This may cause issues for SMSFs holding illiquid assets such as property or farmland that has increased in value.

SMSF Australia and other industry bodies have raised concerns about fairness, complexity and the potential for unintended consequences.

Trustees with high balances should begin planning now before 30 June 2026, to consider asset rebalancing, contribution strategies and the timing of withdrawals. SMSF Australia recommends obtaining advice about your specific circumstances.ⁱⁱ

The advice gap

Despite the increasing complexity of SMSF regulation, the vast majority of trustees continue to operate without professional advice. While the number of SMSFs using financial advisers has grown to 155,000, up from 140,000 in 2023, some 483,000 are not using a financial adviser. ⁱⁱⁱ

This could lead to costly mistakes, especially when navigating contribution caps, pension strategies or related-party transactions. SMSF Australia says that while there’s no legal requirement to obtain advice from a licensed financial planner, “unless you have the skills and expertise to do this yourself, it is certainly conventional wisdom to do so”.iv

The compliance burden

Every SMSF must undergo an annual audit by an approved SMSF auditor. This includes verifying the fund’s financial statements and ensuring it is compliant with super laws. Trustees are also required to value all fund assets at market value as at 30 June each year, using objective and supportable data.

For property and other complex assets, valuations can be time-consuming and costly. The ATO recommends using qualified independent valuers when assets represent a significant portion of the fund or are difficult to assess. Auditors may request evidence such as comparable sales, agent appraisals or formal valuation reports.^v

Failure to maintain accurate records or provide sufficient documentation can result in audit delays, contraventions or penalties. Trustees must also ensure their investment strategy is regularly reviewed and documented, particularly when starting pensions or making significant contributions.

Looking ahead

As the SMSF sector evolves, trustees face a dual challenge: adapting to new tax rules and maintaining rigorous compliance. For those considering an SMSF – or already managing one – the message is clear. Getting financial advice can give you peace of mind when the rules are regularly changing.^vi

With Division 296 to contend with and a younger demographic stepping in, the sector is poised for both growth and greater scrutiny.

Whether you’re a seasoned trustee or just starting out, now is the time to review your fund’s structure, seek expert guidance and ensure your paperwork is in order. The future of SMSFs may be more dynamic than ever, but it will also demand greater diligence.

Contact us if you have any questions.

i Highlights: SMSF quarterly statistical report March 2025 | Australian Taxation Office

ii Understanding Div296 I How will taxation of unrealised gains work

iii New SMSF trustees propel uptake of financial advice, but $1 trillion sector still has significant advice gaps | Vanguard Australia

iv What are the rules for Financial Planners giving SMSF Advice? – SMSF Australia

v SMSF administration and reporting | Australian Taxation Office

vi About SMSFs | Australian Taxation Office

Super guarantee rate now 12%: what it means for employers

From 1 July 2025, the superannuation guarantee (SG) rate officially rose to 12% of ordinary time earnings (OTE). This is the final step in the gradual increase legislated under previous reforms.

What’s changed?

Old rate: 11.5% (up to 30 June 2025)
New rate: 12% (from 1 July 2025)

This increase affects cash flow, payroll accruals and employment contracts, especially where total remuneration includes superannuation.

Employer checklist

• Update payroll software: ensure systems are calculating 12% SG correctly from 1 July 2025 pay runs
• Review employment agreements: if contracts are set to inclusive of super, the take-home pay of employees may reduce unless renegotiated or the employer decides to bear the cost of the increased SG rate
• Budget for higher super contributions: consider possible cash flow impacts
• Remember that significant penalties can be imposed for late or incorrect SG payments, including loss of deductions, interest and other administration charges.

Personal superannuation contributions

The annual concessional contribution cap will remain at $30,000 for the 2025/2026 financial year. The annual non-concessional contribution (NCC) cap is set at four times the concessional contribution cap meaning it will also remain at $120,000.

Although the annual NCC cap has not changed, NCCs can now be made by individuals with a total super balance (TSB) of less than $2,000,000 on 30 June 2025 (assuming they have not reached the age 75 deadline and any prior bring forward periods are considered). This is due to the fact that the upper TSB limit links to the general transfer balance cap (TBC) which has increased to $2,000,000.

The relevant TSB amounts for NCCs in the 2025/2026 financial year are summarised in the table below:

Total Super Balance – 30 June 2025	NCC Cap	Allowable bring forward period
Less than $1.76m	$360,000	3 Years
$1.76m to $1.88m	$240,000	2 Years
$1.88m to $2.0m	$120,000	No bring forward
$2.0m and above	Nil	Nil

 

Personal deductible contributions

A superannuation fund member may be able to claim a deduction for personal contributions made to their super fund with personal after-tax funds. A member will normally be eligible to claim a deduction if:

• The member makes an after-tax contribution to their superannuation fund in the relevant financial year
• They are aged under 67 or 67 to 74 and meet a work test or work test exemption
• They have provided the superannuation fund with a valid notice of intent to claim
• The super fund has provided the member with acknowledgement of the notice of intent to claim

Notice of intent to claim

If the member is eligible and would like to claim a deduction, then they must notify their super fund that they intend to claim a deduction.

The notice must be valid and in the approved form – Notice of Intent to Claim or vary a deduction for personal super contributions (NAT 71121).

The tax legislation provides a notice of intent to claim will be valid if:

• The individual is still a member of the fund
• The fund still holds the contribution
• It does not include all or part of an amount covered by a previous notice
• The fund has not started paying a super income stream using any of the contribution
• The contributions in the notice of intent have not been released from the fund that the individual has given notice to under the FHSS scheme
• The contributions in the notice of intent don’t include FHSSS amounts that have been recontributed to the fund.

What you need to consider

The member must provide the notice of intent to claim to the fund by the earlier of:

• The day the individual lodges their income tax return for the relevant financial year; or
• 30 June of the following financial year in which the individual made the contribution.

However, if a super fund member provides a notice of intent after they have rolled over their entire super interest to another fund, withdrawn the entire super interest (paid it out of super as a lump sum), or commenced a pension with any part of the contribution, the notice will not be valid.

This means the individual will not be able to claim a deduction for the personal contributions made before the rollover or withdrawal.

Updated superannuation and tax thresholds: 2025/2026

	2024/2025	2025/2026
General transfer balance cap	$1,900,000	$2,000,000
Defined benefit income cap	$118,750	$125,000
CGT lifetime Cap	$1,780,000	$1,865,000
Untaxed plan cap – Lifetime	$1,780,000	$1,865,000
Superannuation Guarantee – Maximum Contributions base (per quarter)	$65,070	$62,500
PCG 2016/5 Safe Harbour rates for related party LRBA’s	9.35%	8.95%

 

Remaining unchanged

The following thresholds will remain unchanged for the 2025/2026 financial year.

Concessional contribution cap	$30,000
Non-concessional contribution cap – standard	$120,000
Non concessional contribution cap – maximum bring forward over 3 financial years	$360,000
Division 293 – Annual adjusted taxable income	$250,000

Title Searches

Title searches are now an annual requirement for the SMSF Auditors to be satisfied that:

• The ownership of the property is held in the correct name.
• Evidence that there are no charges over the property, to ensure the fund complies with SIS Regulation 13.14.

From 1 July 2025, the SMSF Auditors will be requesting a title search each year for each property held by the SMSF. The title search will need to be dated after the audit year-end. This means that for the 30 June 2025 year-end audit, a title search will need to be dated 1 July 2025 or later.

Property Valuations

Property valuations must always be recorded at market value and the ATO made a point of reminding SMSF trustees of this last year when they issued over 16,000 letters where an asset was held at the same value for several years.

For residential properties, the process is relatively simple as we will generate an automated desktop valuation through our SMSF processing software.

For commercial properties or farmland, an independent valuation must be obtained within 6 months of 30 June e.g. for the 30 June 2025 year-end audit, it would need to be dated between 1 January 2025 and 31 December 2025. For the next two years after the independent valuation was obtained, the following alternate valuation methods can be applied:

• Net capitalisation method – if evidence is provided of an appropriate market yield, this yield can be applied to the current rent.
• Annual growth rate – if evidence is provided of an appropriate annual growth rate, this rate can be applied to the last independent valuation.
• Comparative sales – recent comparable sales for similar properties in the area can be used.

As we rapidly approach yet another end of financial year it may be timely for you to consider a little financial “housekeeping”. I have therefore listed a few important considerations depending on your own circumstances.

Superannuation

Firstly, for many individuals Superannuation is often an important consideration at this time of year. So, let’s look at some of the important issues remembering that this may not be relevant to your personal circumstances and so very important that you talk to your adviser or obtain personal advice relevant to you.

Concessional (Deductible) Super contributions:

• The limit this year (20/21 FY) for personal deductible and employer super contributions combined is $25,000. Important to remember that some people are also claiming deductions on insurance policy premiums that are held inside super, this amount is also included in the $25,000 Deductible/employer limit.
• For any contributions to count toward this financial year the contributions need to be made and cleared within the fund prior to 30/6/2021. We normally find that Super Guarantee employer contributions for June will normally only hit your fund after 30/6 and therefore only count toward next year’s limits. The same applies to last year’s contributions.
• Any excess deductible/employer contributions over the $25,000 will firstly count toward what is called your non concessional (or after-tax contribution limit). Then the excess contributions will be taxed at your marginal tax rate as if you had received this amount as income and a small excess contribution charge of around 3% pa may apply. You may also elect to withdraw the excess contribution from the fund once the ATO has provided you with their determination post completion of your personal tax return.
• In some cases, depending on your age, you will also need to meet a work test to make a super contribution.
• Super contribution limits for next year (21/22) are increasing to $27,500 for concessional (deductible limits)
• The employer super guarantee (SG) rate of super for this financial year is 9.5% increasing to 10% next year and will gradually increase to 12% over time.

Other Contributions and Limits

• The Non-Concessional (tax-free) limit for this year is $100,000. Again, must be deposited before 30 June. Please ensure you have not triggered the 3 year bring forward rule in the previous 2 financial years.
• Next year the limit increases to $110,000.
• The other change here is that the cap on the amount of total superannuation that can be converted to a pension will increase from $1.6 to $1.7mil next financial year.

Superannuation pensions:

• Important to ensure that you have taken the minimum pension prescribed for 20/21 year. This rate of pension depends on a combination of your balance as at the start of the financial year as well as your age. The Government decided that because of Covid 19 the pension rate would be halved this financial year. That is, if the minimum rate of pension in your case was 5% of the super balance, then you would only need to take out 2.5% as a minimum. Please contact us if you are unsure what this amount is.
• Next year the minimum pension rate was due to end on 30^th June 2021. The Government recently announced that it would be extending this reduction to the 21/22 year as well.  This does not mean that you must take the reduced level of pension, as you would still have the option of taking an amount above this minimum level.
• Consideration may also need to be given, for those larger super balances, as to when you would look to commence a pension, if not already done so. The reason for this is that as mentioned in the previous section, the cap on how much you can have in a pension is increasing to $1.7mil from 1/7/21.

---

Other considerations:

Whenever we think about financial housekeeping, the other things that come to mind are investment, insurance, and estate planning.

• June is a good month to review all your investments, not only superannuation. With a sharp rebound in many share markets over the last 12 months it may be appropriate to offset any capital gains against prior carried forward losses or rearrange your portfolio by selling a loss-making investment to offset realised gains obtained during this year.  Again, this depends on your individual circumstances as one size does not fit all.
• At this time of year, it is also a good time to review your insurance policies to determine whether you have sufficient or perhaps too much cover depending on changed circumstances. Are you perhaps paying for insurance outside of super when it may be possible to have that inside super and be able to claim the premium as a tax deduction? Remembering that not all insurances can be claimed as a deduction.
• By estate planning we refer mainly to wills and powers of attorney. Whilst not necessarily directly related to super or investment it is very important that you review these documents on a regular basis to determine whether they are still appropriate given any recent changes to your circumstances. Anything such as relationship changes for you or a family member, new addition to your family, asset purchases or sales, recent inheritances, death in the family or increased employment or business risks can be a trigger to re-examine your estate planning arrangements. Too often we find that people will complete their estate planning 5, 10 or even 20 years ago and then store it in the bottom drawer without any further reference. Inherent in its name, estate planning really is about forward planning. It is important that you regularly turn your mind to whether your current arrangements are still fitting with your wishes and your circumstances. Failing to put things in place and regularly review during your lifetime will likely result in increased costs and unnecessary complexities for the loved ones you leave behind. Please let us know if you or a family member would like to have your estate planning reviewed by our specialist department.

On behalf of the Quill team, I would like to thank you for your continued support during a financial year that was more challenging than most and which not only created some challenges for our clients but also our team. Let’s hope that next financial year sees a continued improvement on the economic front as well as an improvement in freedom of travel.

Disclaimer

The information contained in this article is provided by Quill Group Financial Services in good faith and provides factual information and general advice only. No direct or implied recommendations are given in the material. It has been provided without taking into account your investment objectives, financial situation and particular needs. Before making a decision on the basis of any information contained in this article you need to consider whether it is relevant in your particular circumstances.

This article on the Total Superannuation Balance Cap (TSB Cap) and Transfer Balance Cap (TBC) from John Maroney, CEO of the SMSF Association was originally published by the Sydney Morning Herald on 8 September 2020 under the title “Cap complexities make life difficult for SMSF trustees“.

---

Total Superannuation Balance Cap complexities make life difficult for SMSF trustees

A new law giving more than 800,000 additional employees superannuation choice has been passed by Government this week removing limitations that forced them into a super fund dictated by their employer. There is however a catch – the changes are not retrospective and will only apply for NEW agreements made after 1 January 2021.

---

Superannuation choice was limited for many

The Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 passed through the Senate on Tuesday 25th August 2020. The updated Your Super, Your Choice laws remove the option of enterprise bargaining agreement deals being used to force workers into an industry superannuation fund even where they have an existing superannuation fund.

Our own Mark Beveridge wrote about this back in March 2019 for Financial Standard Super: A pay rise, but only if you give us your super to look after!

Large employers such as Coles, Woolworths and Kmart have previously entered into these types of deals, as well as many public sector employers and universities.

---

Employers choosing their employees super fund

“You wouldn’t let your employer pick your bank, and your employer shouldn’t be able to force you into a super fund,” Assistant Minister for Superannuation Jane Hume said.

“Currently, for some workers in enterprise bargaining agreements, their super fund is chosen for them by their employer, whether they like it or not.

“This can lead to duplicate accounts, higher fees and costs to workers.”

Default funds will still exist for workers who do not make a fund choice, but workers employed on EBAs will have the right to choose their fund.

---

When do the changes come into effect?

The start date was delayed to January 1, 2021, and APRA will conduct a review in two years on the impact on defined benefit schemes, such as those operated by UniSuper.

A report from the Attorney-General’s department last December found 85 current enterprise agreements locked 13,974 workers into Maritime Super, Labour Union Co-Operative Retirement Fund, Mine Super, TWU Super and WA Super, even if the workers already had a different fund.

---

Superannuation standard choice form now a must

With these changes all new employees must be provided with a the ATO standard super choice form.

In addition, any employees who were previously restricted to a specific superannuation fund due to an enterprise agreement now can choose their own super fund when their existing employer enters into a new agreement with them after 1 January 2021.

According to the explanatory memorandum any employee can choose their own super fund (including an SMSF) where they are employed under a workplace determination or enterprise agreement that is made on or after 1 July 2020 (this date was amended to 1 January 2021).

“An employer does not have to provide existing employees with a form unless requested once a new determination or agreement is made. Where there is no chosen fund for an existing employee, an employer that continues to make compulsory contributions for that employee with the same fund, in accordance with the previous determination or agreement, will comply with the choice of fund requirements,” the memorandum said.

---

Changes not retrospective – some employees still stuck without choice of fund

The superannuation choice changes are not retrospective. They only apply to employees under new workplace agreements or determinations entered into after 1 January 2021. This means that even after that date, some employees will still not have superannuation choice until they come under a new agreement.

The explanatory memorandum said Treasury considered three options:

1. Make no changes to superannuation choice;
2. Extend choice to new workplace agreements and determinations;
3. Extend choice to all existing workplace agreements and determinations;

The decision was made to support option two on the basis that it “extends choice in a meaningful way while minimising compliance costs for employers.”

---

Why the change?

The Financial System Inquiry and the Productivity Commission Inquiry into superannuation found that denying superannuation choice discourages member engagement and leads to super fund members paying higher or duplicate fees across multiple funds.

“Improvements in the efficiency of contributions processing (through the adoption of SuperStream) have made the right to exercise choice of fund easier and individuals should have the right to exercise choice unless there are special factors, such as employer and member rights and obligations in regard to defined benefit funds,” said Martin Fahy chief of the Association of Superannuation Funds of Australia.

---

Choosing a superannuation fund

If you previously have been locked into a superannuation fund with your employer under an enterprise agreement, now is the time to see advice on whether that super fund is best for you.

Quill Group has licensed financial advisers and superannuation specialists who can assist you in choosing the right superannuation fund as well as other strategies to ensure you are making the most of tax-effective contributions.

If you have any questions regarding these changes please get in touch.

 

The superannuation guarantee amnesty is a one-off opportunity to correct past unpaid SG amounts. Employers have a six-month window, until 7 September 2020, to disclose, lodge and pay unpaid SG amounts for their employees. Employers can claim deductions and not incur administration charges or penalties during this amnesty.

---

Superannuation guarantee amnesty background

The complexities surrounding employee remuneration has become evident in recent years and calculating the appropriate level of employer superannuation contributions is no exception.

Before the amnesty period expires on 7 September 2020, employers should take the opportunity to ensure all contributions have been made, and review the payroll classification to ensure the various components of the payroll are correctly classified as “Ordinary Times Earnings” (OTE).

If incorrect classifications have been made, now is the time to confront the mistakes and make a voluntary disclosure to the ATO under the amnesty.

---

Common mistakes when calculating superannuation guarantee payments

Some common mistakes we’ve seen include:

• Not treating annual leave loading as OTE
• Appropriate classification of allowances paid to employees
• Not making superannuation contributions on behalf of independent contractors (not operating through an entity) who are paid for their labour.

Under the amnesty, an employer may report any unpaid superannuation guarantee shortfall, without the imposition of the administration charge ($20 per employee per quarter), penalties, and the ability to claim a tax deduction for the shortfall.

Post the amnesty period, the penalties will be severe with a 200% penalty on top of the SGC shortfall, administration charge, and non-deductibility of the costs. The ATO has a much clearer view of non-compliant employers, with real time reporting of payroll since the introduction of Single Touch Payroll (STP).

---

Applicable period

The amnesty only covers periods between 1 July 1992 until the quarter ended 31 March 2018.

The voluntary disclosure under the amnesty is available to all employers, provided they have not been subject to an ATO investigation in respect of the unreported superannuation. Unlike other taxes, any shortfall of superannuation may extend back as far as 1 July 1992 and is not limited to the usual 4-year window.

Taking action now could save an employer significant tax costs, as well as any potential embarrassment. Remember the deadline is 7 September 2020, so we recommend acting now while there is still time.

---

How to apply for the employer superannuation amnesty

To apply for the amnesty, you must:

• lodge one approved SG amnesty form with the ATO for each quarter by 11.59pm on 7 September 2020
• check amounts are correct and there are no errors on the forms
• complete the declaration to confirm you are applying for the amnesty
• save the form as an .xls file.

Once the ATO receives your forms, they will tell you which quarters are eligible for the amnesty.

SG shortfalls for any quarter between 1 July 1992 and 31 March 2018 may be eligible for the amnesty if they haven’t been disclosed previously, or aren’t subject to a current or previous audit.

See also:

• ATO: SG amnesty form (XLS file)
• ATO: Superannuation guarantee amnesty
• Other articles on superannuation

If you have any questions regarding the superannuation guarantee amnesty, please contact your Quill Relationship manager or contact us if you need assistance with your business accounting or payroll needs.