What is superannuation?

Question 1 of 4

What is super?

Have you ever saved up to buy something? Maybe you are putting money aside at the moment to buy a car or something that is important to you. Superannuation, often called super, is money you set aside during your working life to provide an income to live on when you retire from work. Most people start to contribute to super when they begin work and keep contributing until they retire. The money is invested in one or more super funds of your choice.

You must leave your super in your fund until you either reach a minimum age or meet strict requirements set by the government. Your super is invested in assets such as bank accounts, property or shares, which earn an income. This income is reinvested in your super fund and then earns more income. This process, where you can generate earnings from previous earnings, is called compounding and greatly increases your final super payout.

The government encourages super savings by offering tax concessions that are not available with other forms of saving. In addition, no tax is charged for most people when they retire at 60 or older and take their super as a regular pension or a lump sum.

  • Fact 20

    In the 1950s, some ATO personnel informally referred to the tax laws as Pig's Stew because they collected Payroll tax, Income tax, Gift duty, Sales tax, Stevedoring industry charge, Tobacco charge, Estate duty and Wool tax.

Allowable deduction

An expense incurred in the course of earning income that can be used to reduce assessable income. Allowable deductions are sometimes simply referred to as deductions.

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