How super is taxed
Your super scheme is either taxed or untaxed. Tax still applies to both types, but the tax is deducted at different stages. Taxed super funds deduct tax when money gets added to the fund and earns investment returns, while untaxed schemes only pay tax when money is taken out.
At GESB, we manage both taxed and untaxed super schemes. Our taxed schemes are GESB Super, Retirement Income Pension, and RI Term Allocated Pension, and our untaxed schemes are West State Super and Gold State Super.
How will your contributions be taxed?
The way your contributions are taxed depends on whether you have a taxed or untaxed fund, and if the contributions are made from before-tax or after-tax income.
Let’s look at before-tax contributions first.
Before-tax contributions are also known as concessional contributions. These are payments made to your super from your income before you have paid tax. Examples include:
- Employer contributions, like Super Guarantee
- Salary sacrifice
- Contributions for which you have claimed a tax deduction, if you are eligible
There are different rules for concessional contributions for taxed and untaxed funds.
Your concessional contributions cap
If you’re a GESB Super member, you have a taxed scheme so these caps apply for the 2020/21 financial year:
- $25,000 per year
If you make contributions to super over your cap, you might need to pay extra tax.
Carry forward concessional contributions from 1 July 2018
If you have a total super balance of less than $500,000 at 30 June of the previous year, you will be able to carry forward your unused concessional contributions cap amounts into later financial years. For example, if in 2018/19 you have $15,000 in concessional contributions you will have a carry forward amount of $10,000 that can be added to your cap for 2019/20.
For West State Super and Gold State Super
If you’re a West State Super or Gold State Super member, you have an untaxed scheme. This means your before-tax contributions are not capped, but they count towards your cap when making these contributions to a taxed scheme. For example, if you made $50,000 in concessional contributions to West State Super (including your employer contributions), you wouldn’t be able to make any further concessional contributions to a taxed scheme in that financial year.
With West State Super and Gold State Super, there’s an untaxed plan cap of $1.565 million2 per super fund, which applies to the untaxed element of your benefit. This is the amount that can be paid as a lump sum or transferred to a taxed fund and still be subject to tax concessions.
For a breakdown of your tax components i.e. taxed vs untaxed, call your Member Services Centre on 13 43 72 or use our Live chat and ask for a ‘benefit estimate’.
After-tax contributions are also called non-concessional contributions. These are contributions you make to your super from your income after you’ve already paid tax, such as personal contributions or spouse contributions.
Since you’ve already paid tax on your income, there is no further tax for contributions you make to your super in this way. There are limits that apply to how much money you can add to your super, known as contribution caps.
Your non-concessional contributions cap
If you’re a GESB Super or West State Super member, your non-concessional contribution cap for the 2020/21 financial year is:
- $100,000 per year
- If you’re under 65, you may be able to bring forward one or two years of contributions i.e. $100,000 plus $200,000, giving you a cap of $300,000 over three years1
The amount available under the bring-forward rule depends on your total super balance as at 30 June in the previous financial year.
If you transfer super from other funds, a 15% tax is applied to the untaxed element3 and no tax on the taxed element.
If you’ve received a Commonwealth Government Super Co-contribution in the past, no tax applies to these contributions.
Do we have your tax file number?
If you don’t provide us with your tax file number (TFN), you might need to pay more tax on your super than is necessary and we may not be able to accept some of your contributions. This will also affect your eligibility for the Super Co-contribution.
Learn more about how your super is taxed
Read our Tax and super brochure for more details on how your super is taxed, including:
- Tax that applies to investment earnings
- Tax on benefits including lump-sum benefits and death benefits
- Other considerations including Division 293 tax for high income earners
1 The amount available under the bring-forward rule depends on your total super balance as at 30 June in the previous financial year. For more information please read the Contributing to your super brochure.
2 For the 2020/21 financial year, indexed annually in line with Average Weekly Ordinary Time Earnings, in increments of $5,000 rounded down. The untaxed plan cap applies for each untaxed scheme you are a member of.
3 Up to the untaxed plan cap of $1.565 million for the 2020/21 financial year.
- Call us on 13 43 72
Thank you for printing this page. Remember to come back to gesb.wa.gov.au for the latest information as our content is updated regularly. This information is correct as at 18 January 2021.