Is superannuation taxable income?
All eligible employees in Australia receive superannuation payments from their employer. But does your taxable income include these super payments?
25 Sept 2025
All eligible employees in Australia receive superannuation payments from their employer. But does your taxable income include these super payments?
Does taxable income include super payments?
No, the money paid into your super account is not included as part of your taxable income. This means it’s not included or reported as income when you lodge your income tax return at the end of the financial year.
For example, if your employer paid you a salary of $75,000 plus your compulsory Superannuation Guarantee (SG) payments and you received no other income during the financial year, then your taxable income would simply be $75,000. Super contributions themselves are taxed separately.
What is taxable income?
Taxable income is the money you make during a financial year that you have to pay income tax on. According to the ATO, this can be calculated by taking your ‘assessable income’ and then subtracting any deductions you’re allowed to claim. Your assessable income can include:
- Your salary and wages
- Bonuses, overtime and commissions
- Tips, gratuities and other payments for your services
- Interest from bank accounts
- Dividends, rent and other income from investments
- Pensions.
You may be able to claim tax deductions for costs you’ve incurred that are directly related to your income, which could include work-related travel and vehicle usage or home office expenses. You may also be able to claim a deduction on the premiums you pay for a direct income protection policy. If you successfully claim a deduction, this means the cost of that expense is taken off your total taxable income, reducing the overall tax you have to pay.
How is super taxed?
Most super contributions are taxed in one way or another. However, if, when and how a particular contribution is taxed will depend on factors like:
- Whether it was made from your before-tax or after-tax income
- Whether you exceed one or both of the super contribution caps
- Whether you’ve retired
- Your level of income.
How are concessional super contributions taxed?
Before-tax super contributions, or ‘concessional contributions’, are generally taxed at 15% at the time they’re received by your super fund. This is less than most marginal income tax rates, meaning most workers are likely to pay less tax on their concessional contributions than on their regular income. Concessional contributions include compulsory employer contributions and salary sacrifice payments you make to your super account from your pre-tax income.
According to the ATO, if you’re a low income earner (earning $37,000 or less at the time of writing) in a particular financial year, the low income super tax offset (LISTO) will apply. This means any tax paid on your concessional super contributions will be automatically added back into your super account, up to a cap of $500 per financial year. Bear in mind, the LISTO is different from the similarly named low income tax offset (LITO), which doesn’t specifically relate to super.
On the other hand, high income earners (those with a combined annual income and super contributions of more than $250,000), must pay either an additional 15% tax on their concessional contributions or the amount in excess of the current $250,000 threshold, whichever is less, as part of the Division 293 tax. In addition, the ATO says if you don’t take your excess concessional contributions out of your super fund, you could be taxed up to 94% on them, depending on your circumstances.
How are non-concessional contributions taxed?
After-tax super contributions, also known as ‘non-concessional contributions’, are not usually taxed when received by your super fund, as you’ve generally already paid tax on this income. Non-concessional super contributions include contributions made from your after-tax income, contributions made by a spouse to your super fund, and personal contributions not claimed as an income tax deduction.
However, the ATO also states that if your after-tax contributions exceed the cap for a particular financial year, you can then choose to either withdraw the excess amount and have it assessed as part of your taxable income, or leave it in your super account and let it be taxed at the high rate of 47%.
This article was reviewed by our Senior Finance Writer Mark Bristow before it was updated, as part of our fact-checking process.
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