Superannuation is a form of long-term savings, designed to help Australians save for their retirement. However, many people are unaware that contributions to superannuation come with a contribution tax. This article will explain why you are being charged contribution tax on your super and what it is.
What is Contribution Tax?
Contribution tax is a type of tax imposed on contributions made to your superannuation. It is imposed by the Australian Taxation Office (ATO) and is designed to limit the amount of money that can be contributed to superannuation each year. The tax rate for contributions is 15%, and this is deducted from the amount of money that is contributed.
The tax is deducted from the contributions before they are added to your superannuation balance. This means that the amount of money that is actually deposited into your superannuation account is less than the amount that you originally contributed.
Why am I Being Charged?
You are being charged contribution tax because the ATO wants to limit the amount of money that can be contributed to superannuation each year. The tax is designed to prevent people from using superannuation as a way to avoid paying income tax.
It is important to be aware that contribution tax is not the same as income tax. Income tax is a tax on the money that you earn, whereas contribution tax is a tax on the money that you contribute to your superannuation.
In conclusion, contribution tax is a type of tax imposed on contributions made to your superannuation. It is important to be aware of why you are being charged this tax and how it is different from income tax. Knowing this information will help you to make informed decisions about your superannuation and ensure that you are making the most of your long-term savings.