How super is taxed
Accumulation 1 and
Spouse Account members
The information in this document forms part of the
UniSuper Accumulation 1 Product Disclosure Statement
and UniSuper Spouse Account Product Disclosure
Statement, both issued on 1 October 2016.
THIS DOCUMENT WAS PREPARED ON 1 OCTOBER 2016.
Inside
Tax on contributions
1
Government caps on contributions
2
Spouse contributions tax offset
4
Tax on transfers
4
Taxation of contributions where no TFN has
been provided
4
Providing your TFN
5
Tax on investment earnings
5
Tax on withdrawals
5
Anti-detriment payments
6
Definitions for tax purposes
7
University of Technology Sydney
PROPOSED CHANGES TO SUPER:
FEDERAL BUDGET 2016
SuperRatings, a superannuation research company,
has awarded UniSuper a Platinum rating for its
Accumulation products.
Go to www.superratings.com.au for details of its
rating criteria. SuperRatings does not issue, sell,
guarantee or underwrite this product.
Chant West has awarded UniSuper ‘Super Fund
of the Year’ in both 2015 and 2016—something
no other super fund has been able to achieve. Our
Accumulation products have received a 5 Apples
rating. We also received the ‘Investments Best Fund’
award in 2015. For further information about the
methodology used by Chant West, see
www.chantwest.com.au.
Chant West has given its consent to the inclusion in
this document of the references to Chant West and the
inclusion of the logos and ratings or awards provided
by Chant West in the form and context in which they
are included.
This document contains more detailed information about how
superannuation in your Accumulation 1 or Spouse Account is taxed.
Information contained in this document which is not materially adverse
may change from time to time. Updated information can be found on
our website or by contacting us. ASIC Class Order 14/1252 applies to
this document.
In this document, UniSuper is referred to as UniSuper or the Fund,
ABN 91 385 943 850. UniSuper Limited is referred to as UniSuper or
the Trustee, ABN 54 006 027 121.
UniSuper Management Pty Ltd is referred to as USM,
ABN 91 006 961 799, AFSL No. 235907.
A number of proposed changes to
super were announced in the May 2016
Federal Budget.
At the time of preparation, all
announcements are proposals only and
haven’t yet been passed into law.
You can read more about the Federal
Budget proposals affecting super at
unisuper.com.au/budget.
If you’re thinking about making a change
to your super, we encourage you to
carefully consider the proposed changes
and to seek advice from a qualified
financial adviser. You can contact
UniSuper Advice on 1300 331 685.
How super is taxed
1
ACCUMULATION 1 AND SPOUSE ACCOUNT
Tax on contributions
The table below provides an overview of tax on contributions and assumes that you have provided your tax file
number (TFN).
HOW THE TAX
IS PAID
MAIN TYPES OF CONTRIBUTIONS
HOW MUCH TAX IS PAID
Concessional (before-tax)
contributions are contributions from
your before-tax income.
15% on contributions up to the concessional
contributions cap.*
The tax is
deducted from
your super
account.
Contributions which exceed your concessional
contributions cap are included in your
assessable income and taxed at your marginal
tax rate. An excess concessional contributions
charge will also apply.
The Australian
Taxation Office
(ATO) will
provide you with
an assessment.
The tax is paid
‘out of your
pocket’ to the
ATO.
Concessional contributions include:
Superannuation Guarantee (SG)
employer contributions
Salary sacrifice contributions
made by your employer from your
before-tax salary
Personal contributions where you
provide us with a valid form that
states your intention to claim a tax
deduction.
AA
AA
AA
You will also be entitled to a 15% tax offset
on the excess concessional contributions
(because you have already paid tax on this
money). The offset is not refundable.
You can release up to 85% of your excess
concessional contributions from your
accumulation super account.
Any excess concessional contributions you
release from your super account no longer count
toward your non-concessional contributions cap.
Any excess concessional contributions not
released from super are counted towards your
non-concessional (after-tax) contributions cap.
Non-concessional (after-tax)
contributions are contributions made
from your take-home pay.
There is no tax payable on non-concessional
contributions made up to your non-concessional
contributions cap.
N/A
Non-concessional contributions include:
Personal contributions that
have not been claimed as a tax
deduction
Contributions your spouse
makes on your behalf are treated
in the same way as after-tax
contributions, provided your
spouse does not claim the
contribution as a tax-deductible
employer contribution and
provided you are not living
separately from your spouse
Excess concessional contributions
not released from your super
account.
If you exceed the non-concessional
contributions cap, you may choose to release
the super contributions in excess of your nonconcessional contributions cap plus 85% of
any associated earnings.
The ATO will
provide you with
an assessment.
The tax is paid
on the associated
earnings ‘out of
your pocket’ to
the ATO.
AA
AA
AA
The associated earnings released are taxed at
your marginal tax rate. You will also be entitled
to receive a 15% tax offset on the associated
earnings included in your assessable income
(because you have already paid contributions
tax on this money). The offset is not refundable.
If you choose not to release your excess nonconcessional contributions they will remain in
your super account and the excess will be taxed
at 49%.
The excess
contributions tax
is paid out of your
nominated super
account.
* I f you earn more than $300,000 in an income year, ‘Division 293 tax’ will apply to your concessional contributions. Refer to the section
‘Additional tax for high income earners’ on page 2 for more information.
2
How super is taxed
ACCUMULATION 1 AND SPOUSE ACCOUNT
Government caps on contributions
The government imposes limits, called contributions
caps, on the total amount of contributions that
you can make to super in each financial year and
still receive concessional tax treatment on those
contributions.
If you exceed the caps, you may pay a higher tax
rate on contributions that exceed the caps, or
we may refuse to accept contributions in some
circumstances.
Each cap applies to all contributions made by you
or on your behalf in a financial year, regardless
of how many employers or super funds you have.
Government co-contributions are not included in
either of the caps.
It’s your responsibility to monitor the contributions
made into your UniSuper account, and to any
accounts you may hold in other super funds, to
ensure you don’t exceed the caps.
CAPS ON CONCESSIONAL
(BEFORE-TAX) CONTRIBUTIONS
Concessional (before-tax) contributions are
generally contributions made by, or for you,
before tax is paid. They include your employer
contributions, salary sacrifice contributions and
personal contributions made by you where you
provide us with a valid form stating your intention to
claim a tax deduction and we acknowledge receipt of
this form in writing.
If you’re aged below 49 on 30 June 2016, you can
contribute concessional contributions of up to
$30,000 in the 2016/17 financial year and incur the
15% contributions tax, provided we have your TFN
and the high income earners tax does not apply to
you. See ‘Additional tax for high income earners’
opposite for details.
If you’re aged 49 years or over on 30 June 2016,
your concessional (before-tax) contributions cap is
$35,000 for the 2016/17 financial year.
If you exceed your concessional contributions cap
during a financial year, the excess amount is included
in your assessable income and taxed at your marginal
tax rate. You will, however, receive a 15% tax offset
in your tax return because you have already paid the
15% contributions tax through your super. The offset
is not refundable.
You may also be liable to pay a charge on the
increase in your tax liability relating to the excess
concessional contributions for the relevant
financial year.
If you have excess concessional contributions, the
ATO will send you a letter, together with a voluntary
release authority form, to authorise the release of
money from your superannuation account up to
85% of the amount of your excess concessional
contributions for that financial year.
FEDERAL BUDGET PROPOSAL
The 2016 Federal Budget proposed a
reduction in the annual concessional
contributions cap—for people of all
ages—to $25,000 from 1 July 2017.
It also proposed the introduction of
“catch-up” concessional contributions
for people with a super balance of
less than $500,000. If legislated, this
means members with balances under
$500,000 who haven’t made $25,000
before-tax contributions in any year
from 1 July 2018 will have the next
five years (on a rolling basis) to make
additional contributions to reach this
cap. Read more about the Federal
Budget proposals at
unisuper.com.au/budget.
ADDITIONAL TAX FOR HIGH INCOME EARNERS
An additional tax of 15% is imposed on concessional
contributions into your super (referred to as lowtax contributions) made by, or on behalf of, high
income earners who earn more than $300,000 for an
income year. This additional tax is referred to as the
‘Division 293 tax’.
Income for Division 293 tax purposes broadly
includes the sum of your taxable income, reportable
fringe benefits, total net investment income/losses,
and low-tax contributions.
Low-tax contributions are broadly your
superannuation contributions which have been
concessionally taxed. Low-tax contributions do not
include non-concessional contributions or excess
concessional contributions.
How super is taxed
3
ACCUMULATION 1 AND SPOUSE ACCOUNT
If the Division 293 tax applies to you it will be
applied to the lower of:
your low-tax contributions; and
the sum of your income for Division 293
purposes and low-tax contributions above the
$300,000 threshold.
CAPS ON NON-CONCESSIONAL (AFTER-TAX)
CONTRIBUTIONS
AA
AA
Currently you can contribute up to $180,000 in
non-concessional (after-tax) contributions in the
2016/17 financial year without paying any
additional tax.
If you need to pay the Division 293 tax, the ATO
will issue you with a notice of assessment stating
the amount of tax payable for the financial year and
provide you with a release authority to enable the
amount to be paid from your super account.
If you are under 65 and your non-concessional
contributions exceed $180,000 in a financial year
under the ‘bring forward’ rule, you may be able
to make up to three years of non-concessional
contributions without paying any additional tax.
For example, you could contribute $540,000 in one
financial year, but nothing in the subsequent two
financial years. Certain conditions apply under the
bring forward rule. See the ATO website,
www.ato.gov.au, for more information.
Former temporary residents who receive a
Departing Australia Superannuation Payment
may apply to the Commissioner for a refund of any
Division 293 tax paid.
FEDERAL BUDGET PROPOSAL
The Federal Budget includes a proposal
to reduce the Division 293 threshold to
$250,000 from 1 July 2017. Read more
about the Federal Budget proposals at
unisuper.com.au/budget.
NEW LOW INCOME SUPERANNUATION
TAX-OFFSET PROPOSED FROM 1 JULY 2017
The 2016 Federal Budget proposed that from
1 July 2017, a Low Income Superannuation Tax
Offset (LISTO) will be introduced to reduce tax
on super for low income earners. The LISTO will
provide an offset on the tax paid on concessional
(before-tax) contributions made on behalf of low
income earners.
This would mean that members with an adjusted
taxable income up to $37,000 who’ve had a
concessional contribution made on their behalf will
receive a tax offset up to a cap of $500.
The LISTO would replace the current Low Income
Superannuation Contribution (LISC).
If you exceed your non-concessional contributions
cap, you may choose to release the super contributions
in excess of your non-concessional contributions cap
plus 85% of any associated earnings. The associated
earnings released are taxed at your marginal tax rate.
You will also receive a 15% tax offset on the associated
earnings included in your assessable income. The offset
is not refundable.
The ATO will issue you with a notice of assessment
stating the amount of tax payable for the financial year
and provide you with a release authority to enable the
amount to be paid from your super account.
Alternatively you may choose to leave the excess
non-concessional contributions and the associated
earnings in your super instead of releasing the funds,
in this case, you will be liable to pay tax on the excess
contributions at a rate of 49%.
4
How super is taxed
ACCUMULATION 1 AND SPOUSE ACCOUNT
If your contributions exceed your non-concessional
contributions cap in a financial year, the excess amount
could be taxed at up to 95% overall.
For more information about the contributions caps
and the types of contributions that count towards the
concessional and non-concessional contributions caps,
refer to the ATO website, www.ato.gov.au.
GOVERNMENT ANNOUNCEMENT 15 SEPTEMBER 2016
The Government has proposed to
reduce the non-concessional (after-tax)
contributions cap to $100,000 per year,
effective from 1 July 2017. This proposal
would also reduce the maximum
‘bring forward’ contributions cap to
$300,000.
In addition, from 1 July 2017, members
with a super balance of $1.6 million will
no longer be eligible to make after-tax
contributions.
These proposals are different to those
announced in the 2016 Federal Budget.
For further information, see
unisuper.com.au/budget-reforms.
Spouse contributions tax offset
Your spouse can contribute to your UniSuper
account on your behalf and may be eligible to receive
an 18% tax offset on spouse contributions of up
to $3,000. However, this is subject to eligibility
requirements and depends on the level of your
spouse’s assessable income and reportable fringe
benefits and reportable super contributions.
The maximum spouse contribution tax offset of
$540 is available where contributions of up to
$3,000 are made on behalf of your spouse in an
income year, and where the income threshold (noted
above) of your spouse does not exceed $10,800.
Where the income of your spouse is greater than
$10,800, the tax offset will gradually reduce and will
completely phase out once the income level of your
spouse reaches $13,800.
For more information about the spouse contributions
tax offset, refer to the ATO website,
www.ato.gov.au.
FEDERAL BUDGET PROPOSAL
The Government has proposed that
the income threshold for the spouse
will increase from $13,800 to $37,000,
starting 1 July 2017. Read more about
Federal Budget proposals at
unisuper.com.au/budget.
Tax on transfers
No tax is payable if you transfer your benefit from
one super fund to another, unless the amount
contains an untaxed element, for example from
certain public sector super funds. An untaxed
element transferred into UniSuper attracts the 15%
contributions tax.
Please note that UniSuper is no longer a Qualifying
Recognised Overseas Pension Scheme (QROPS)
under United Kingdom (UK) law, so we can no
longer accept UK pension transfers. For more
details, please refer to ‘Important changes to QROPS
transfers’ at unisuper.com.au/news.
We are also unable to accept transfers from
KiwiSaver accounts.
Taxation of contributions where
no TFN has been provided
As a Spouse Account can generally only be opened
if you provide your TFN, this section generally only
applies to Accumulation 1 members.
If you have not provided your TFN, any contributions
or transfers that would attract tax when paid
into UniSuper (such as SG or salary sacrifice
contributions or any part of a transfer from an
overseas super fund that is treated as a taxable
contribution) will also attract an additional tax of
34% that will be deducted from those contributions
(totalling 49%).
If you provide your TFN within the three financial
years following the contribution, we may be able to
claim this additional ‘No-TFN’ tax back from the ATO.
If we are able to claim the additional ‘No-TFN’ tax
back, we will re-credit it to your Accumulation 1
account if you still have one.
How super is taxed
5
ACCUMULATION 1 AND SPOUSE ACCOUNT
Further, we cannot accept various types of
contributions, including personal non-concessional
contributions for you (including spouse
contributions), if you have not provided your TFN.
The lawful purposes for which your TFN can be
used and the consequences of not providing us
with your TFN may change in future as a result of
legislative change.
Providing your TFN
Tax on investment earnings
The Trustee is authorised and required to ask you
for your TFN by tax law and in accordance with the
Superannuation Industry (Supervision) Act 1993.
Investment earnings are generally taxed in Australia
at up to 15%. In some cases this rate may be lower as
a result of any tax deductions and credits for which
the Fund may qualify. This tax is deducted from the
Fund’s investment earnings before they are allocated
to your account.
Your TFN will only be used for lawful purposes,
which include:
finding and combining your superannuation
benefits where insufficient information is available,
providing information, including your TFN, to
the ATO, for example when you receive a benefit,
to validate initial registration information
associated with first employer contributions
using SuperTICK or if you are a lost member or
have unclaimed benefits,
verifying you are the person to whom the super
entitlements belong prior to transferring your
benefit to another super fund, unless you do not
provide consent for your TFN to be used for this
purpose, and
providing information, including your TFN, to the
trustee of another superannuation fund when your
benefits are being transferred, unless you advise
us in writing that you do not wish your TFN to be
passed on.
AA
AA
AA
AA
It is not an offence not to quote your TFN, however,
providing your TFN to your superannuation fund
will have the following advantages (which may not
otherwise apply):
we will generally be able to accept all types
of contributions to your accounts (subject to
contributions caps),
the tax on contributions to your super accounts
will generally not increase,
other than the tax that may ordinarily apply, no
additional tax will be deducted when you start
drawing down your superannuation benefits, and
it will make it much easier to identify you as the
person to whom the super benefits belong and to
trace different superannuation accounts in your
name so that you receive all your super benefits
when you retire.
AA
AA
AA
AA
Tax on withdrawals
You may have to pay tax when you withdraw your
benefit from the Fund. UniSuper will normally
deduct any tax before paying your benefit. The
amount of tax you will pay will depend on your
circumstances, such as your age and how your benefit
is paid to you. Please note that if you are under 60
and have not provided a TFN, withholding tax at the
rate of 49% will generally be payable on the taxable
component of a benefit payment made to you.
AGE 60 OR OVER
If you are 60 or over, the lump-sum benefit paid to
you will generally be tax-free.
BEFORE AGE 60
If you take your benefit before age 60, tax may apply to
your lump-sum benefit payment. Your benefit generally
comprises a tax-free and taxable component. When
you make a lump-sum withdrawal of your benefit, the
amount you receive will be drawn down from your
tax-free and taxable components in proportion to the
amount of each component in your entire benefit.
If you are under 60 and have reached your
preservation age, you will pay no tax on the taxable
component of your lump-sum benefit up to the low
rate cap amount. The low rate cap amount for the
2016/17 financial year is $195,000. The low rate
cap is a lifetime limit. You will pay tax of 17% on the
amount of the taxable component of your lump-sum
benefit in excess of this threshold.
6
How super is taxed
ACCUMULATION 1 AND SPOUSE ACCOUNT
If you haven’t reached your preservation age when
you take your lump-sum benefit, tax will generally
be levied on the entire taxable component at a rate
of 22%.
The above summary assumes that no part of your
benefit contains an untaxed element. If any part of
your benefit contains an untaxed element, additional
taxation would apply.
TAXATION ADVICE
Before you withdraw any benefits or
make a substantial contribution, we
recommend that you obtain taxation
advice from a taxation specialist.
TEMPORARY RESIDENTS
The taxable component of benefits claimed by
temporary residents will generally be subject to
38% withholding tax. For more details, refer to our
Departing Australia superannuation payment fact
sheet available on our website or by calling us on
1800 331 685.
Transfers to a New Zealand KiwiSaver scheme
however are not taxed. They are also tax free when
withdrawn from your KiwiSaver scheme once you
are legally allowed to access them.
DEATH BENEFITS
Death benefits are paid as a lump sum and are
generally received tax free if paid to a beneficiary who
is your dependant for tax purposes. This includes
where the benefit is paid to your legal personal
representative and a dependant has benefitted or may
be expected to benefit from the payment.
Tax is generally payable on the taxable component of
the lump-sum benefit if it is paid to a beneficiary who
is not your dependant for tax purposes. This includes
where the benefit is paid to your legal personal
representative, and a non-dependant for tax purposes
has benefited or may be expected to benefit from the
payment. In these circumstances, 17% tax is withheld
on any taxed element, and 32% on any untaxed
element.
There may be additional tax implications if there are
insurance proceeds.
Anti-detriment payments
We may pay an additional amount, referred to as an
‘anti-detriment’ payment, in addition to the
lump-sum death benefit if the death benefit is paid
to certain beneficiaries of the deceased member. The
anti-detriment payment represents a reimbursement
of the contributions tax that the Fund paid on the
deceased member’s taxable contributions.
The payment will only be made where a lump-sum
death benefit is paid to the spouse, former spouse
or child (including an adult child) of the deceased
member.
The payment may also be made if a lump-sum death
benefit is paid to the trustee of the deceased member’s
estate and the proceeds of the estate are expected
to be distributed to the deceased member’s spouse,
former spouse or child (including adult child).
FEDERAL BUDGET PROPOSAL
The Budget included a proposal to
remove anti-detriment provisions from
1 July 2017. Read more about Federal
Budget proposals at
unisuper.com.au/budget.
How super is taxed
ACCUMULATION 1 AND SPOUSE ACCOUNT
Definitions for tax purposes
DEPENDANT
AA Your spouse or former spouse.
AA Your children under the age of 18.
AA A person who is in an interdependency relationship
with you at the date of your death.
AA A person who was financially dependent on you at the
date of your death.
SPOUSE
AA A person to whom you are legally married.
AA A person, whether of the same sex or opposite sex,
AA
with whom you are in a relationship that is registered
under an Australian state or territory law.
A person, whether of the same sex or opposite sex, to
whom you are not legally married but who lives with you
on a genuine domestic basis as a couple.
CHILD
Includes a child, adopted child, step-child, ex-nuptial child,
child of your spouse or child within the meaning of the
Family Law legislation.
INTERDEPENDENCY RELATIONSHIP
A relationship between two people (whether or not
related by family) if they live together in a close personal
relationship, and one or each of them provides the other
with financial support, and one or each of them provides
the other with domestic support and personal care. If two
people have a close personal relationship but don’t live
together or provide this support or care because either
or both of them suffer from a physical, intellectual or
psychiatric disability, they may still be deemed to have an
interdependency relationship.
7
CONTACT US
HELPLINE
1800 331 685
+61 3 8831 7901
FAX
1300 224 037
+61 3 8831 6141
UNISUPER ADVICE
1300 331 685
+61 3 8831 7916
WEBSITE
unisuper.com.au
EMAIL
[email protected]
ADDRESS
UniSuper
Level 1, 385 Bourke Street
Melbourne Vic 3000
Australia
IMPORTANT INFORMATION
This document has been prepared and issued by UniSuper Limited
ABN 54 006 027 121 (referred to throughout this document as either ‘UniSuper’
or ‘the Trustee’) as Trustee of UniSuper ABN 91 385 943 850 (referred to
throughout this document as ‘the Fund’). The information in this document is of
a general nature only and does not take into account your individual objectives,
financial situation or needs. You should consider the appropriateness of the
information having regard to your personal circumstances and consider consulting
a qualified financial adviser before making an investment decision based on
information contained in this document. The value of your investments can go up
or down and investment returns can be positive or negative. The Trustee does not
guarantee the performance of the Fund’s investment options. To the extent that
this document contains any information which is inconsistent with the UniSuper
Trust Deed and Regulations (together, ‘the Trust Deed’) the Trust Deed will prevail.
© UniSuper Limited 2016
UNISIBR0002 1016