Australian Superannuation: Quick & Easy Guide (and 3 Ways to Grow Yours) 2025
Superannuation (commonly referred to as “super”) is Australia’s retirement savings system. Generally, this does not depend on your visa (so long as you have work rights) or tax residency status. You can use this online tool to find out if you’re eligible for this retirement scheme. It’s still a fairly new system, and it’s undergone many changes over the years, so we’ll do our best here to explain it in simple, easy to understand terms – unlike the government’s pages, which make you feel you actually understand less after reading them.
Table of Contents
Choose Your Super
Before we go any further, in order to grow your super account, you actually need to have an account first. There are many options on the market, and if you don’t know what you’re looking for, the choice can be very overwhelming. Here’s a quick guide you can use to determine which fund you should choose for yourself:
What to look for in a super fund
| Performance | Compare performance of funds over the last five years, including % returns, losses, growth, risk, and the impact of fees and costs, if applicable. Consider also the size of the fund itself, the bigger, the more stable. |
| Fees | Fees will either be dollar ($) amounts or percentages (%), or both. The lower, the better. Fees are usually deducted monthly, and after actions such as switching investments. Some fees might be for: – Admin – buy/sell spread – Investment – Transactions – Insurance |
| Insurance | Typically 3 types: – Life (also known as “death cover”) – Total and permanent disability (TPD) – Income protection When comparing, look for: – Premium rates – Amount of cover – Any exclusions that might affect you |
| Investment Options | Most common options include: – Growth – Balanced – Conservative – Cash – Ethical – MySuper Some funds will let you choose the weight of different asset classes or direct investments in your fund. |
| Portfolio Options | This is the type of asset your fund can invest in. Some supers only invest in specific asset classes and a specific % of your income in each, while others allow DIY options. Come common assets include: – Australian stocks / equity – International stocks / equity – Private equity – Bonds – Cash – Debt – Infrastructure – Fixed income |
| Services | Some funds offer services for extra fees, some include: – Financial advice – Super splitting |
| Fund Type | There are 2 main types: – Industry: profit-for-member organisations, meaning they don’t pay dividends or profits to shareholders. – Retail: commonly run by financial institutions, such as banks, and wealth management companies, meaning they have a responsibility to share profits with shareholders. Others may include: – Public: created for employees of a Federal or State government, most public sector funds are only open to government employees. – Self Managed Super Fund (SMSF): private funds managed by individuals. Anyone can set up a SMSF, however there are many legal hoops to jump through. |
If you’re not sure how to make the decision yourself, you can use the ATO’s YourSuper Comparison tool online, which can compare many funds for you.
You can also use Canstar to find the best super for you, if you prefer not to use a government source.
Author’s note: when choosing my own fund, I made a whole spreadsheet for myself to make sure I had all the information I wanted to have before making a decision. If you’d like a copy of this spreadsheet to inform your own choice, you can find it here.
Growing Your Fund
There are numerous ways to increase your balance, and we’ll try to cover all of them here, so you know exactly where you stand.
You can grow your super through:
- Compulsory employer contributions (concessional)
- Voluntary contributions, such as:
- Salary sacrifice (concessional)
- Personal contributions, up to the allowed cap (concessional)
- Contributions you or your spouse make out of after-tax income (non-concessional)
- Government contributions (if you’re eligible)
What are concessional and non-concessional contributions, you might be asking?
There are 2 types of super contributions:
- Concessional: both employer contributions (including contributions made under a salary sacrifice arrangement) and personal contributions claimed as a tax deduction.
- not yet been taxed (‘before tax’ contributions)
- Non-concessional: these contributions include personal contributions for which you don’t claim an income tax deduction
- already been taxed (‘after tax’ contributions)
Employer Contributions
Employers are required to contribute a percentage of your earnings into a superannuation fund on your behalf. As of 2025, the superannuation guarantee rate is 11.5%, set to increase to 12% in July 2025 and advised to stay at 12% for 2028 and onward. This means that you’ll be able to save even more in your fund for your future retirement.
If you wish to save more, you can opt to salary sacrifice. This is basically an agreement with your employer to pay part of your salary or wages into your super fund for you. This effectively reduces your taxable income, meaning you pay less tax on your income. These concessional contributions are taxed at a rate of 15%, which is already lower than the lowest income threshold of 16% (learn more about Australian taxes here). This means that to some people, putting more money into their super (formally: making higher contributions) is a hedging strategy, as they end up paying less tax on the income they keep in their fund instead of in their bank account.
Don’t fall into the trap of thinking it’s just like a bank account, however. There are strict rules on when you’ll have access to this money, how much you can take out and the like, all in an effort to ensure every resident and citizen has the means to pay for their expenses during their retirement, and so they don’t have to rely on government benefits, or worse, end up homeless or unable to afford basic necessities.
Withdrawals
Generally speaking, you can withdraw your super when you turn 65 (even if you’re not retired), or when you research your preservation age and you retire. There might be differences in fees and procedures if you’re not retired, however all of this should be detailed on your specific fund’s website.
In some circumstances, however, you can access your super funds earlier:
- On medical, compassionate, hardship or incapacity grounds
- Under the First home super saver scheme (voluntary contributions only)
- You’re a temporary resident and you’re leaving Australia (more on in a moment)
- Your super balance is less than $200
First home super saver
The first home super saver scheme (FHSS) is a government program that helps first-time homebuyers save money through their superannuation account. It allows you to make voluntary contributions (additional to anything that must be paid by your employer, including salary sacrifice or your own personal contributions) into your super to help you save money for your first home. These contributions are also taxed at the low 15%. Under this scheme you can contribute up to $15,000 per year, or total $50,000.
When you’re ready to use the funds to help buy a home in Australia, you can submit a request to release your FHSS amount plus associated earnings. You’ll also get a 30% tax offset on the withdrawn amount, making it a pretty smart way to save for your first property. There are percentage caps on how much you can withdraw based on the contribution type, so make sure you read all the fine print on the ATO’s website.
Let’s calculate this so you can see the savings for yourself, taking an $85,000 per annum salary as an example:
Tax brackets:
- $0 – $18,200: Nil
- $18,201 – $45,000: 16%
- $45,001 – $120,000: 30%
Calculation:
- First $18,200: $0
- $18,201 to $45,000 ($26,799): $4,287.84 (16%)
- $45,001 to $85,000 ($40,000): $12,000 (30%) Total tax = $16,287.84
Scenario: Salary $85,000 with $10,000 FHSS contribution
- Taxable income reduces to $75,000
- First $18,200: $0
- $18,201 to $45,000 ($26,799): $4,287.84 (16%)
- $45,001 to $75,000 ($30,000): $9,000 (30%)
- Total tax = $13,287.84
FHSS contribution tax:
- $10,000 × 15% = $1,500 tax in super
When withdrawing later:
- Assessable amount: $8,500 (after 15% contribution tax)
- Tax at marginal rate (30%): $2,550
- 30% tax offset: -$2,550
- Net withdrawal tax = $0
Compare this to a normal scenario (wihout the FHSS):
- Tax paid: $16,287.84
- Take home: $68,712.16
FHSS scenario:
- Tax on salary: $13,287.84
- Tax on super contribution: $1,500
- Total tax: $14,787.84
- Take home: $70,212.16
- Effective tax saving: $1,500
Temporary residency
If you were in Australia temporarily and are going to leave permanently, you may be eligible to claim your superannuation contributions through a Departing Australia Superannuation Payment (DASP). Keep in mind that this payment is taxed at varying rates depending on your visa type and residency status. You can only submit a DASP claim after you have left Australia and your visa has expired, however you can start the application process before you leave, which may make it easier to complete.
If you receive a DASP, you’re also entitled to a refund of any Division 293 tax you paid. Division 293 tax is an additional tax on super contributions, reducing the tax concession for individuals whose combined income and concessional contributions is more than $250,000.
Withdrawal types
When you retire, you can withdraw your super either as a lump sum (all at once), or as a super income stream. Most super payments become completely TAX FREE after you’re over 60 years old, so it’s definitely worth keeping the balance until then!
If you choose to withdraw as a lump sum, once the money is out of your super, it’s no longer considered super. This means that if you invest this money, earnings on those investments are not taxed as super and may need to be declared on your tax return.
You may also opt for the super income stream, which are regular payments from your super to your account – this is sometimes referred to as a pension. This is a popular option, as it helps retirees manage their income and budget spending. This option might also be more financially friendly, as when you receive income from your super income stream, you may be eligible for offsets equal to 15% of the taxed element (money that’s already been taxed in the super fund), and 10% of the untaxed element (money that hasn’t yet been taxed).
There are many other very nuanced details that make up withdrawals, too nuanced to cover here, so if this is something you’d like to dive deeper into, please check the ATO’s website regarding withdrawals.
Contribution Caps
There are, however, limitations on contributions. These are called contribution caps. Contribution caps are the limits on how much you can pay into your super fund each financial year without having to pay extra tax. This means that if you contribute more than the cap, it will be taxed just like your regular income, meaning there isn’t as much incentive to keep this money in your super.
Concessional contributions
The cap for concessional contributions in 2025 is $30,000:
Non-concessional contributions
The cap for non-concessional contributions in 2025 is $120,000:
Note: The non-concessional cap for an income year is a multiple of the concessional contributions cap.
Remember: the cap doesn’t mean you can’t invest more in your super, it’s just a cap on how much of your contributed amount will get the lower tax rate.
Conclusion
This was a lot! To be completely honest, I, an Australian citizen and resident of 10+ years, learned a bunch of new things while writing this.
I don’t claim to be an authority on the topic or a tax specialist, this is all gathered from the ATO’s resources, and reproduced in a way that is hopefully easier to understand and easier to take action on! The ATO uses complex language and complicated formulas to work everything out, so I hope this post has helped you gain a greater understanding of Australia’s super system, and how you can benefit from it – even as a temporary resident.
Good luck—you’ve got this!
