Taxation of Superannuation in Australia - Tax On Contributions

Tax On Contributions

Employer contributions (including pre-tax, superannuation guarantee and "salary sacrifice" contributions) is assessable income of the superannuation fund. Similarly, contributions by the self-employed is assessable income of the superannuation fund, to the extent that the contributor is entitled to a tax deduction for the contribution. In this case the contributor is taxed at the marginal rate via the income tax system, and a maximum deduction of $5000 plus 75% of the contributions over $5000 can be made. The amount which is not deductible by the contributor is an "undeducted contribution" to the superannuation fund, provided the contributor gives the fund notice that the contributor will not be deducting the amount.

Employee contributions ("post tax" or undeducted contributions) made out of after-tax income do not attract a tax liability (although it is proposed that after 1 July 2007 after tax contributions above certain limits will be subject to tax).

Read more about this topic:  Taxation Of Superannuation In Australia

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