HOW TAX WORKS IN AUSTRALIA’S SUPERANNUATION SYSTEM
Cogger Gurry • February 13, 2025
Australia’s super system plays a vital role in ensuring financial security for individuals in retirement. However, how superannuation is taxed can appear complex.
In Australia, superannuation is taxed at three main points: contributions, investment earnings and withdrawals. This structure is known as a TTE (taxed, taxed, exempt) system: contributions to the superannuation fund are taxed and the investment earnings within the fund are also taxed, but withdrawals made during retirement are generally exempt from tax. That is, in Australia’s system:
- Contributions, including those made by employers under the super guarantee (SG) and voluntary concessional contributions, are taxed at a concessional rate of 15%. This is lower than the rates that apply to most other forms of income, providing a tax advantage.
- Earnings generated from fund investments during the accumulation phase are also taxed at a flat rate of 15%. This is beneficial because it’s lower than the tax rates that typically apply to investment income earned outside of superannuation.
- Withdrawals made during retirement are generally tax-free. This is intended to enhance the appeal of building super savings over your working life, ensuring you have a tax-effective income stream in retirement.
Call us today to discuss your superannuation with one of our experts 03 5571 0111
Our office will be closed for the Easter Holiday from Friday the 18th till Monday the 21st April, reopening on Tuesday the 22nd April 2025 Everyone here at CoggerGurry would like to wish you all a safe and happy Easter break
Our office will be closed for the Easter Holiday from Friday the 18th till Monday the 21st April, reopening on Tuesday the 22nd April 2025 Everyone here at CoggerGurry would like to wish you all a safe and happy Easter break
The 2025–26 Federal Budget has reinforced the Albanese Government’s commitment to tax compliance, with a major boost in funding to the ATO to strengthen enforcement—including Fringe Benefits Tax (FBT). With that extra funding comes increased ATO scrutiny on employers. If you're responsible for FBT compliance, now’s the time to get your house in order. High-Risk Areas Under the ATO Microscope : 🚗 Car Fringe Benefits Incorrect vehicle classification (especially dual cab utes and SUVs). Invalid or poor-quality logbooks. Incorrectly treating private use (e.g. home to work, errands) as business use. Misuse of the statutory formula method. 🍽️ Meals & Entertainment Misunderstanding what qualifies as deductible vs. entertainment. Inadequate documentation for functions or staff events. Incorrect application of the "otherwise deductible" rule. ⚡ Electric and Plug-in Hybrid Vehicles From 1 April 2025 , PHEVs lose their FBT exemption unless: The car was in use before 1 April 2025, and There is a binding agreement to continue use post-1 April. Many employers are still unaware of these transitional rules. 🚨 What the ATO Is Watching Nil or non-lodged returns where fringe benefits were likely provided. Incorrect treatment of employee contributions . Mismatches between FBT and income tax reporting. Penalties can be up to 75% of the shortfall , so it pays to be proactive. ✅ What You Should Do Review the benefits you've provided in the 2025 FBT year. Reassess logbooks, vehicle use, and entertainment records. Seek advice on grey areas like PHEVs or meal benefits. Lodge and pay on time. 📞 Need help reviewing your FBT exposure before the deadline? Get in touch today—we’re here to help you stay compliant and penalty-free. Read more about this on our website HERE or give us a call on 03) 5571 0111 📅 Key FBT Dates for 2025 FBT year ends : 31 March 2025 Lodgment due (paper) : 21 May 2025 Lodgment due (tax agent) : 25 June 2025 Payment due : 28 May 2025
