Introduction to Super
What Is Superannuation?
Superannuation is a form of long term savings designed to help you financially in retirement. The aim of superannuation is to ensure that working Australians will have a source of income once they retire. For most people, any income from superannuation will supplement the age pension. The Superannuation Guarantee (SG) ensures most Australian workers receive superannuation support from their employers.
Am I eligible?
Most employees are covered by the superannuation guarantee legislation. The main exceptions are those who are:
- paid less than $450 per calendar month
- 70 years of age or over (unless mandated contributions)
- under 18 years and working 30 hours a week or less
- covered by a Bilateral Superannuation Agreement, or
- employed for domestic or private work for 30 hours a week or less.
A common misconception is that contractors are not covered by the superannuation guarantee. If you have been engaged under a contract that is mainly for your labour you are covered by the superannuation guarantee for at least the labour portion of your contract. If you are unsure, please contact the Australian Taxation Office (ATO) on 13 10 20.
How much should my employer pay?
The superannuation guarantee sets out the minimum level of support that an employer must contribute. The current minimum is 9% of your gross earnings base. Some awards and registered agreements stipulate a higher amount. Your employer is required to make a contribution into a complying superannuation fund at least once every quarter.
Can I choose my own superannuation fund?
From 1 July 2005 the majority of employees have been given the right to choose the superannuation fund that will receive their superannuation guarantee contributions. The eligible employees who are able to choose their fund was extended from 1st July 2006 to cover employees working for corporations who previously could not choose a fund because they were employed under a State Award. These employees are now covered under a Federal Workplace Agreement called a 'notional agreement preserving state awards. We have a separate page that covers choice of fund.
What happens if my employer has not paid my superannuation?
Your employer has up to the 28th day after the end of the quarter to make superannuation guarantee and salary sacrifice (before tax) contributions on your behalf. For example, payments for the September quarter are due on 28 October. If they do not do this, they are required to pay the superannuation guarantee charge to the Tax Office. Once the Tax Office has received that payment they will then make the contribution into your account.
The only difference to this ruling is that personal member (after tax) contributions must be paid within 28 days of the end of month in which they were deducted from your wages.
How do I find my lost superannuation?
As people change jobs, they sometimes lose track of their superannuation benefits. When a super fund cannot contact a member they report this to the Tax Office. The Tax Office keeps a register of these lost members. The 'Lost Members Register' (LMR) holds details from all regulated superannuation funds in Australia, except self-managed funds. You can search to see if you have any lost super benefits by using the SuperSeeker on the ATP web site at www.ato.gov.au/super or contacting the ATO on 13 28 65 and following the prompts. You will need to have your tax file number ready in order to conduct your search.
How contributions are taxed?
Super funds are required to deduct a 15% contributions tax from your employer's superannuation guarantee contributions. This also applies to amounts contributed through salary sacrifice (before tax) contributions. If you have made an after-tax personal member contribution it has already been subject to income tax and does not attract further taxation. Contributions Tax does not apply to normal transfers or rollovers between complying funds as long as they have come from a taxed source.
Please note that higher tax is applicable if you have not notified your super fund of your tax file number.
How are fund earnings taxed?
Complying super funds are subject to a tax of up to 15% on investment earnings and 10% on capital gains. Super funds that invest in Australian equities are able to offset any dividend franking credits received against their overall tax liability. Because super fund earnings have already been subject to tax, you do not need to declare the earnings of the fund on your tax return.
When can I access my Super?
Since 1 July 1999, all contributions made into a regulated fund and all fund earnings after 30 June 1999 are preserved until retirement, regardless of their source. These preservation rules require benefits to remain within the Australian superannuation system until you reach retirement age. Government regulations also set out a minimum age for the release of benefits, known as the preservation age. Your preservation age depends on their date of birth, as follows:
| Date of birth | Preservation age |
|---|---|
| Before 1/7/60 | 55 |
| 1/7/60 – 30/6/61 | 56 |
| 1/7/61 – 30/6/62 | 57 |
| 1/7/62 – 30/6/63 | 58 |
| 1/7/63 – 30/6/64 | 59 |
| After 30/6/64 | 60 |
There are exceptional circumstances under which you may be able to apply for early release of your super. These are described on our 'Accessing your Super' page.
