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Does Superannuation Get Taxed?

Many of you may have noticed on your post June 2018 superannuation statement that an amount has been deducted for tax. 
Many people believe that they pay no tax in their super. Unfortunately, this isn’t true.
Each year your employer pays 9.5% of your salary into your nominated super fund in order to meet their Superannuation Guarantee obligations. For every dollar that your employer pays into your fund, 15% of it is taken as contributions tax. It’s worse if you earn over $300k per year when the tax paid jumps up to 30%.
If you’re a savvy investor, you’ll have your super invested in funds that earn income throughout the year. Be it interest, rent, dividends etc. These earnings don’t escape tax. They are in fact also taxed at 15%.
Of course these tax rates are well below most people’s personal tax rates. So having your money in super does mean you’re paying a lower rate. The trade - off for this is that you can’t access your money until you reach preservation age.
What does all this mean? No one likes paying tax, and tax on super is difficult to minimize as you can’t apply any personal tax deductions to your super fund.
What can I do? There are two things you can do to help. Firstly, you can invest in good quality superannuation funds that enjoy strong growth rates. It won’t reduce the tax paid but you won’t mind as much if your balance is growing strongly. 
Secondly, be mindful that most high quality superannuation funds allocate part of your money to Australian based, high quality shares. These shares for the most part enjoy tax credits on the income they earn. 
Income earned (known as dividends) will often have an associated tax credit that can be used by your super fund to offset tax paid on the earnings.
Understanding tax is a full time job and best left to the experts.  However, you should be aware of what you’re paying and by taking a few prudent steps, do your best to minimise it.

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