Superannuation is one of Australia's most powerful wealth-building tools — a compulsory savings system that forces you to invest in your future, largely sheltered from income tax. With the Super Guarantee rate at 11.5% in 2025-26 and generous tax concessions, understanding super can make a significant difference to your retirement outcome and your tax bill today.
This guide covers the SG rate, contribution types, caps, tax treatment, salary sacrifice strategy, government co-contributions, and what happens to your super when you retire or leave Australia.
Super Guarantee Rate 2025-26
Your employer must pay the Super Guarantee (SG) — a mandatory minimum super contribution — on top of your wages. The SG rate schedule:
Super Guarantee Rate Schedule
| Financial Year | SG Rate |
|---|---|
| 2024-25 | 11.5% |
| 2025-26 | 11.5% |
| 2026-27 onwards | 12% (permanent) |
Example: Earning $80,000/year → employer must contribute at minimum $80,000 × 11.5% = $9,200 to your super fund.
Types of Super Contributions
All super contributions fall into two categories:
Concessional vs Non-Concessional Contributions
| Type | Source | Tax in Fund | 2025-26 Cap |
|---|---|---|---|
| Concessional (CC) | Pre-tax: employer SG, salary sacrifice, personal deductible | 15% (30% for Div 293) | $30,000/year |
| Non-Concessional (NCC) | After-tax: personal contributions, spouse contributions | 0% (paid from after-tax income) | $120,000/year |
Going over the concessional cap: excess is included in your assessable income and taxed at your marginal rate, with a 15% offset for the tax already paid by the fund.
Going over the non-concessional cap: excess must be withdrawn with associated earnings, taxed at your top marginal rate.
How Super Is Taxed
Super's tax treatment is one of its biggest advantages — contributions and earnings are taxed far below most people's marginal income tax rate.
Super Tax Summary
| Phase | What's taxed | Rate |
|---|---|---|
| Accumulation phase | Concessional contributions entering the fund | 15% |
| Accumulation phase | Investment earnings inside the fund | 15% (10% for long-term capital gains) |
| Retirement phase | Investment earnings inside pension account | 0% |
| Lump sum (taxable component, age 60+) | Withdrawals | 0% |
| Lump sum (taxable component, age 55-59) | Withdrawals up to low rate cap ($235,000) | 0% (or 15% above cap) |
| Division 293 | Extra tax for high earners (income + CC > $250K) | Additional 15% on CCs |
Salary Sacrifice into Super
Salary sacrifice lets you redirect pre-tax salary into super before income tax is calculated. The benefit: instead of paying income tax at 32.5%, 37%, or 45% on that income, you pay only 15% tax inside super.
Salary Sacrifice Example — $90,000 Salary, $10,000 Sacrificed
Without sacrifice: Earn $90,000, pay tax on $90,000. Tax on the top $10,000 at 32.5% = $3,250 income tax.
With salary sacrifice: Effective salary = $80,000 (taxed as normal). $10,000 goes into super, taxed at 15% = $1,500.
Tax saving: $3,250 − $1,500 = $1,750 per year
Employer SG still calculated on the full $90,000 (check your award — some use reduced salary).
Total concessional contributions: employer SG ($90,000 × 11.5% = $10,350) + sacrifice ($10,000) = $20,350 — under the $30,000 cap.
Carry-Forward Contributions
If your total super balance is below $500,000 at 30 June of the previous year, you can carry forward any unused concessional cap from the past 5 years and make a larger concessional contribution in the current year. This is powerful if you had a low-income year and want to catch up.
Government Co-Contribution (Low-to-Middle Income)
If you earn below $58,445 (2025-26) and make non-concessional contributions, the government adds a co-contribution:
- Income at or below $43,445: government contributes $0.50 per $1, up to $500 maximum
- Income between $43,445 and $58,445: the co-contribution phases out to zero
- You must lodge a tax return, and your employer must be making SG contributions on your behalf
Low Income Super Tax Offset (LISTO)
If you earn $37,000 or less, the government automatically pays up to $500 into your super fund — equal to 15% of your concessional contributions. This effectively refunds the contributions tax on low earners' super, meaning low-income earners pay 0% tax on their super contributions.
Accessing Your Super
Super is preserved until you meet a "condition of release":
- Preservation age + retirement: Preservation age is 60 for anyone born after 1 July 1964. Retire at 60 → full access.
- Age 65: Full access regardless of work status.
- Transition to Retirement (TTR): From preservation age, you can draw an income stream of 4-10% of your balance while still working, without fully retiring.
- Compassionate grounds / First Home Super Saver: Limited early access under strict conditions.
Frequently Asked Questions
What is the Super Guarantee rate in 2025-26?
11.5%. It increases to 12% from 1 July 2026.
What is the concessional contributions cap?
$30,000 per year for 2025-26. This includes your employer's SG plus any salary sacrifice or personal deductible contributions.
How is super taxed?
Concessional contributions are taxed at 15% in the fund. Investment earnings inside super are also taxed at 15%. In retirement phase, earnings are tax-free.
When can I access my super?
Generally at your preservation age (60 for those born after 1 July 1964) when retired, or at age 65 regardless of work status.
What is Division 293 tax?
An extra 15% tax on concessional contributions for high earners whose income plus concessional contributions exceeds $250,000, effectively taxing their contributions at 30%.
Can I claim a deduction on personal super contributions?
Yes, if self-employed or if your employer doesn't make SG for you. Lodge a Notice of Intent to Claim a Deduction with your fund before lodging your tax return.
What is salary sacrifice into super?
Directing pre-tax salary into super so it's taxed at 15% (in the fund) instead of your marginal income tax rate. Counts toward the $30,000 concessional cap.
What is the LISTO?
The Low Income Superannuation Tax Offset — up to $500 government contribution into your super if you earn $37,000 or less, refunding the 15% contributions tax.
Is super paid on overtime and bonuses?
SG is paid on ordinary time earnings. Overtime generally doesn't attract SG; most bonuses do. Check your award or enterprise agreement.
What happens to my super if I leave Australia?
Temporary residents departing Australia permanently can claim a DASP (Departing Australia Superannuation Payment), subject to 35% or 45% withholding tax depending on visa type.
What is an SMSF?
A Self-Managed Super Fund — you control the investments with up to 6 members. Running costs typically $2,000-$5,000+/year; generally economical only above $200,000 in balance.
What is the super co-contribution?
The government contributes up to $500 for eligible earners below $58,445 who make non-concessional contributions — $0.50 per $1 contributed, phasing out above $43,445.
Sources: Australian Taxation Office (ato.gov.au); APRA Superannuation Statistics; Treasury Laws Amendment (Fairer for Longer) Act 2024. Educational purposes only — consult a financial adviser for personalised super advice.
Official Sources