Taxation Issues

Superannuation been specifically designed and endorsed by the Federal Government as a preferred way to save for your retirement, and has, therefore, unique tax benefits that make it particularly attractive.


Superannuation can be a tax effective way of building wealth for your retirement. The tax rates imposed will differ depending on what stage of life you are at and in what manner the super funds invested are held.

Accumulation v Income Stream (Pension phase)

There are 2 primary methods of holding your super investments:

  • “accumulation” – the most common form prior to your retirement
  • “income stream” – also commonly referred to as “pension phase”, this is when your super funds are converted into a tax-effective structure that provides you with an income source. Generally occurs once you have retired.

Accumulation phase

  • Contributions Tax is a maximum of 15%.
  • Investment income is taxed at a maximum of 15%.
  • Capital Gains are taxed at a maximum of 15%. However, if the asset has been owned by the superannuation fund for more than 12 months the maximum rate of capital gains tax is 10%.

Income stream phase

  • Contributions tax does not apply as no further contributions are able to be made once established.
  • All income and capital returns achieved by the funds invested are tax free.
  • Pension payments received from the income stream are also tax free for individuals over age 60. For individuals aged between 55 and 60, pension payments (less any tax free proportion) will be taxable at the individual’s Marginal Tax Rate. However, a 15% tax offset is available that can be used towards minimising potential income tax liability.

These superannuation tax rates are in contrast to personal marginal tax rates, which could be considerably higher.