What is the Super Capital Gains Tax?

When you sell an asset and make a profit on your initial purchase, that profit is called a capital gain, and is subject to capital gains tax.

You also pay capital gains tax on your super, but there are a couple of differences in how it is treated.

What is capital gains tax?

The capital gain on the sale of an asset is the difference between how much you bought the asset for and how much you sold it for. So, if you bought a car for $1,000 and sold it for $1,500, then the capital gain you made would be $500. The capital gains tax would be the tax you paid on that $500, and would be some percentage of it, based on your income tax rate.

Capital gains tax also applies to your super fund, and any profit you make on selling assets through it. While this can come about through a retail super fund, it’s perhaps most commonly encountered in self-managed super funds that buy and sell assets like property. However, while capital gains on your super fund do attract tax, the amount you pay will likely be less than you would if you bought and sold the asset outside of super.

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Capital gains tax differences in superannuation

There are two benefits to capital gains inside super, depending on whether your fund is in the accumulation phase or the retirement phase. The accumulation phase is what you will be in for the majority of your life, while you are working and contributing to your super. The retirement phase is what your fund moves to when you retire.

During the accumulation phase, you’ll typically receive a capital gains tax discount of one third, or 33%, for any asset you held for over 12 months. This means that you will effectively be paying a tax rate of 10%, as the tax rate on super is 15%. While this is less than the concession you can receive outside of super, where you receive a discount of 50%, you will often pay less tax through super due to its low tax rate, compared to income tax rates.

Further, during the retirement phase, all capital gains on super held assets are generally tax exempt, meaning you may not have to pay capital gains tax at all. This applies even to assets bought before transitioning into the retirement phase.

For more on super and to compare super funds, click here.

Compare superannuation with Canstar

The following table contains details of the superannuation funds rated by Canstar based on someone aged 40-49. This table has been sorted by one-year performance (highest to lowest).

Please note that the performance information shown in the table is for the investment option used by Canstar in rating of the superannuation product.


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