Complete Guide to Superannuation in Australia (2025–26)
Published by SWIFT ACCOUNTANTS PTY LTD · Last reviewed
Superannuation is Australia's compulsory retirement savings system — your employer must contribute a percentage of your income to a super fund on your behalf. This guide explains how super works, the current 12% rate, how contributions are taxed, how to boost your super, and when you can access it.
What Is Superannuation?
Superannuation (commonly called "super") is a mandatory retirement savings scheme in Australia. Employers are legally required to contribute a percentage of an employee's ordinary time earnings into a nominated superannuation fund. These contributions accumulate over your working life and are designed to provide income in retirement.
Super is one of the most tax-effective investments available to Australians. Contributions and investment earnings inside a super fund are generally taxed at a concessional rate of 15%, far below the marginal income tax rates most workers pay. This tax advantage is why super is such a powerful long-term wealth builder.
As of 1 July 2025, there are approximately $4 trillion in Australian superannuation assets — making it one of the largest pension systems in the world relative to GDP.
The Superannuation Guarantee Rate
The Superannuation Guarantee (SG) is the minimum percentage of ordinary time earnings your employer must contribute to your super fund. The rate has been increasing gradually and reached 12% from 1 July 2025.
| Financial Year | SG Rate |
|---|---|
| 2021–22 | 10.0% |
| 2022–23 | 10.5% |
| 2023–24 | 11.0% |
| 2024–25 | 11.5% |
| 2025–26 | 12.0% |
The SG applies to all employees who are 18 or over (and some under 18 who work more than 30 hours per week). Casual workers are also entitled to super. There is no minimum monthly earning threshold since 1 July 2022 — previously you needed to earn $450 in a calendar month to be entitled to SG.
How Superannuation Is Taxed
Super has favourable tax treatment at each stage: contributions, investment earnings, and withdrawals in retirement.
On Contributions
Concessional contributions (employer SG contributions and salary sacrifice) are taxed at 15% inside the fund — the "contributions tax". This is well below the marginal rates of 32.5% or 37% that most working Australians pay on their regular income. High-income earners (above $250,000) pay an additional 15% tax (Division 293 tax), making their contribution rate 30% in total.
Non-concessional contributions are made with after-tax money and are not taxed again when they enter the fund.
On Investment Earnings
Investment earnings inside a super fund in the accumulation phase are taxed at a maximum of 15%. Capital gains held for more than 12 months are taxed at a discounted rate of 10%. This compares favourably with personal income tax rates, making super an efficient long-term investment vehicle.
On Withdrawals in Retirement
Once you turn 60 and access your super in retirement, withdrawals from a taxed super fund are completely tax-free. This is one of the most significant tax benefits in the Australian financial system.
Contribution Caps
The government limits how much you can contribute to super at the concessional rates. Exceeding these caps results in additional tax.
Concessional Cap (2025–26)
$30,000
Includes employer SG contributions (12% of salary) plus any salary sacrifice. Taxed at 15% inside the fund.
Non-Concessional Cap (2025–26)
$110,000
After-tax personal contributions. Can bring forward up to 3 years ($330,000 total) if balance is under $1.66M.
If your employer contributes 12% of your salary, check how close this gets you to the $30,000 cap before salary sacrificing more. On a $200,000 salary, the SG alone is $24,000 — leaving only $6,000 of concessional cap for salary sacrifice.
Salary Sacrificing Into Super
Salary sacrifice allows you to redirect part of your pre-tax salary into super, reducing your taxable income and the tax you pay on that amount. The sacrificed portion is taxed at 15% inside the fund instead of your marginal rate.
Example: If you earn $90,000 and salary sacrifice $10,000 into super:
- Your taxable income drops from $90,000 to $80,000
- You save 30% tax on $10,000 = $3,000 in income tax saved
- Super fund pays 15% on the $10,000 = $1,500 in contributions tax
- Net tax saving: $1,500 per year ($3,000 − $1,500)
Salary sacrifice is most beneficial for people in the 30%, 37%, or 45% marginal tax brackets. For those in the 16% bracket, the tax saving is minimal (only 1 cent per dollar) and locking money away in super may not be worth it.