How Australia taxes a retirement plan
Every figure this model charges in Australia, what each one means, the tax office page it came from, and the date we last read it. Plus everything the model does not do here.
This page lists the figures for Australia. How the tax model works in every country, and what it leaves out, is on how tax is modelled.
Figures are for the 2026 tax year, read from the authorities on 2026-07-29. Every one of them links to the page it came from. 5 of them we could not source: we hold the figure and could not find an authority page stating it. Those are marked, and they are the ones most likely to be wrong. If you know better, tell us.
Checked against their rate data. That check reaches part of the calculation, not all of it; the rest is worked through by hand from the authority's own rules.
The scale your pension and other ordinary income are charged on. Each band's rate applies only to the part of your income inside it, not to all of it.
Seniors and pensioners tax offsetSAPTO (single)
A cut taken off your tax bill rather than off your income, for anyone old enough to qualify for the Age Pension, whether or not they actually receive it. It shrinks as your income rises and disappears above a set point, and what you draw from super does not count towards that income.
- From age67
- Only people who have reached this age get it. Retire earlier and you go without it until then.
- source
- Shrinks by12.50%
- How much of the credit is withdrawn per unit of income above the starting point. This adds to your effective rate inside that range, often sharply.
- source
- Measured againsttaxable
- Which income figure decides how much is withdrawn. It is not always your total income, and the difference can be worth a lot.
- source
- For a couple, shared1.44
- The couple's amount, as a multiple of a single person's. Each partner gets half of it on their own tax.
- source
- Couple's shrink point, shared1.77
- The couple's shrink point, as a multiple of a single person's. Each partner's own income is measured against half of it.
- source
Low income tax offsetLITO
A second cut off your tax bill, for anyone on a low income at any age. It is worth 700 at most and tapers away in two stages as your income rises, until it is gone.
- Shrinks by5%
- How much of the credit is withdrawn per unit of income above the starting point. This adds to your effective rate inside that range, often sharply.
- source
- Measured againsttaxable
- Which income figure decides how much is withdrawn. It is not always your total income, and the difference can be worth a lot.
- source
Health levy at the full rateMedicare levy
A charge of 2 percent of your taxable income that funds the public health system. Money drawn from super after 60 is not part of that income, so a retiree living on a super pension pays none of it.
- From age67
- These figures apply from this age. Younger people are charged on the figures listed without it.
- source
Medicare levy phase-in (below SAPTO age)
Charges collected alongside income tax, often on your pension specifically. They are a real cost whether or not the country calls them tax.
- Until age67
- These figures apply to people younger than this. From this age a different set takes over.
- source
Medicare levy (below SAPTO age)
Charges collected alongside income tax, often on your pension specifically. They are a real cost whether or not the country calls them tax.
- Until age67
- These figures apply to people younger than this. From this age a different set takes over.
- source
How money held outside a retirement account is charged: on what it pays you each year, on the profit when you sell, or both.
- Charged howaggregated
- Whether investment income joins your other income on the same scale or is charged separately. It decides whether taking more from your portfolio pushes your pension into a higher band.
- source
- Dividends counted up by0.43
- The dividend is inflated before tax is worked out, then a credit gives the inflation back. It moves your other income up the scale in the meantime.
- source
- Credit for tax already paid30%
- Tax the company already paid on the profit, credited against your own bill so the same money is not charged twice.
- source
- Paid out if unusedyes
- Whether an unused credit is refunded in cash rather than simply lost. For a retiree on a low income this is the difference between a credit that is worth something and one that is not.
- source
- Charged as it pays outyes
- Whether income the investment pays you is charged in the year it arises, rather than only when you sell.
- source
Super fund tax (accumulation)
Charges that fall due whether or not you sell anything. Most are worked out from what your portfolio is worth or from an assumed return, and in a bad year those can cost more than the return. Where one is worked out from what you actually made instead, its own row says so.
- Charged on what you actually madeyes
- The charge is worked out from the return your money really earned that year, not from an assumed one. In a losing year there is nothing to charge.
- source
What a loss can be set against, and whether anything left over can be carried into future years.
- Carried forward forno limit
- How many years an unused loss survives to be set against future gains. Zero means it is lost at the end of the year.
- source
- Locked to one kind of assetno
- A loss on one kind of investment can only be set against gains of the same kind.
- source
- Against other income, up tonot applicable
- The most a loss can take off your ordinary income in one year.
- source
- Share usable against other income0
- How much of a leftover loss can be set against income that is not investment income.
- source
Whether a couple is assessed as one household or as two people, which can change the bill substantially at the same total income.
- How a couple is taxedindividual
- Individual means each partner pays on their own pension and their own savings, as two separate people. An account in one name is that person's; we ask how the accounts you hold together are split between you.
- source
equity
Where this country's answer changes depending on the kind of investment, this is what we assume unless you say otherwise.
A threshold frozen in law quietly costs more every year, because your income rises with prices and the threshold does not. Over a thirty-year retirement that is one of the larger effects on this page.
- the income tax bands · Keeps up with inflationno
- If no, this figure is fixed in law. Your income rises with prices and it does not, so it costs you more every year without any rule changing.
- source
- an ordinary investment account · Keeps up with inflationno
- no source found
- SAPTO (single) · Keeps up with inflationno
- source
- LITO · Keeps up with inflationno
- source
- Medicare levy senior phase-in · Keeps up with inflationyes
- source
- Medicare levy · Keeps up with inflationyes
- source
- Medicare levy phase-in (below SAPTO age) · Keeps up with inflationyes
- source
- Medicare levy (below SAPTO age) · Keeps up with inflationyes
- source
Each kind of retirement account here has its own rule for what is taxed when money comes out of it, and those rules are listed account by account on the page for accounts in Australia.
Where you live inside the country
Nothing below the national level taxes income here, so one set of figures is right for the whole country. This is a finding rather than a gap.
What this model does not do here
Every one of them, not a selection. 25 are described below.
We model these and we know we do not get them exactly right. Where the size could be measured, it is stated.
The seniors and pensioners offset has a fixed amount, and income limits that move whenever the lowest tax rate changes. We freeze both, which is the cautious choice. Its limits already rose for 2026-27 and will again when the lowest rate falls to 14 percent in 2027-28, so over a long plan we show a little too much tax near the point where the offset starts to shade out.
Your real tax is lower/up to $2,230 a year/a retiree over 66 whose income sits just below the point where the seniors offset starts to shade out
Each partner of a couple gets a smaller seniors and pensioners offset than a single person does, and we apply the couple figures. A couple who have to live apart for health reasons, one of them in a nursing home or in hospital, keep a larger offset each. We never ask about that, so for such a couple we show up to about 438 a year too much tax for each partner.
Your real tax is lower/up to $438 a year/each partner of a couple who must live apart because one of them is in care or in hospital
From retirement the plan takes the legally required minimum out of your super pension every year, from 4 percent of the balance under 65 rising to 14 percent at 95 or more. The payment itself is tax free, and whatever you do not spend is moved to an ordinary account, where its earnings are taxed from then on. Over a long retirement that migration is the main way an Australian retiree acquires a tax bill at all, and the plan now prices it. In the year your pension starts we charge half the minimum, because the law cuts it by the part of the year already gone and we do not know your start date. What else we simplify: the government has twice halved the minimums in a market crash, and we always charge the full table, which makes the plan slightly more careful in bad markets.
Your real tax is lower/anyone drawing an Australian super pension through a market crash, when the real minimums have historically been halved
Australia's Medicare levy, a health charge on taxable income, starts later for a family than for a single person, and later again for each dependent child. We test each partner of a couple against the single person's threshold, as the law does first, but do not apply the family reduction the law adds on top, and we never ask about children. So a couple where the levy is easing in, or a retiree still supporting a child, can pay a little more here than in law.
Your real tax is lower/a retired couple in the band where the health levy is easing in, and any retiree still supporting a dependent child
The higher health levy threshold for seniors is tied to the seniors and pensioners offset: once your income is high enough that the offset has run out, the higher threshold goes with it and the levy can jump straight to its full 2 percent. We treat the two as unconnected, so in our figures the levy always eases in gradually. In the income band where that happens we show less tax than you would pay.
Your real tax is higher/a retiree whose income is high enough for the seniors offset to have run out
At most 2.1 million can move into the tax free part of super. When your super starts paying you a pension we move up to that ceiling and leave the rest where the fund still pays 15 percent on its earnings. Three shortcuts: the ceiling rises with prices each year rather than in steps of 100,000, each super account you enter has its own ceiling where the law gives you one in total, and pension payments never free up room under it.
Could go either way/anyone with more than about 2.1 million in super, and anyone holding two super accounts that together pass it
An investment bond pays 30 percent tax inside the bond and nothing when you cash it after ten years. We have no account for it: enter it as an ordinary investment account, which taxes its earnings at your own rate each year and its profit when you sell. For someone on a low rate that shows less tax than you would pay. Super held in a fund abroad is also entered as an ordinary account, with what it was worth when you became resident as what you paid.
Could go either way/anyone holding an investment bond or super in a foreign fund
Dividends from shares outside Australia have 15 percent kept by the country they come from, and Australia credits that back only up to its own tax on the same income. We set the credit against your whole tax bill rather than against the tax on the foreign dividends alone. That is exact when foreign shares are most of what you own, and too generous when a small foreign holding sits beside a much larger Australian income, where we show less tax than you would pay.
Your real tax is higher/anyone holding international shares beside a much larger Australian taxable income
We assume the Australian shares you hold are large companies, whose dividends carry a credit at the 30 percent company tax rate. Smaller companies pay 25 percent, and their dividends carry a proportionally smaller credit. If your Australian shares are mostly smaller companies, the credit we hand you is bigger than the one you would get and your tax is understated.
Your real tax is higher/anyone whose Australian shares are smaller companies rather than large caps
We tax an Australian couple as two separate people, as the law does, each on their own pension and their share of your savings. Two things the law lets a couple share are not applied: a partner's unused seniors and pensioners tax offset, which can pass to the other, and the family test in the Medicare levy. Both can only lower the bill, so where they apply we show a little more tax than you pay.
Your real tax is lower/couples where one partner has much less income than the other
These exist in law and we leave them out, usually because applying them would need a question we do not ask.
From July 2026 a very large super balance is no longer fully sheltered. An extra 15 percent applies to the share of your fund's earnings sitting above 3 million, and another 10 percent above 10 million, billed to you personally. We do not charge it. In our source material a 4 million balance earning 240,000 pays 9,000 a year and a 6 million balance pays 27,000. It reaches fewer than one super holder in two hundred, and the threshold is per person rather than per couple.
Your real tax is higher/up to $27,000 a year/anyone with more than 3 million in super, a small group nationally and a larger one among people who use a tool like this
An old public sector pension paid from an untaxed fund, such as CSS or PSS, is taxed at your normal rates with an offset of 10 percent of the pension, and that offset stops growing at 13,125 a year once the pension passes 131,250. We cannot yet give this pension its own type. Entered as after tax, the plan shows it with no tax at all. Entered as before tax, it is taxed at full rates with no offset, which is up to 13,125 a year too much.
Your real tax is higher/up to $13,125 a year/a retiree with an untaxed-source public sector defined benefit pension (CSS, PSS, state schemes)
Land tax is charged by the state, and it is the one Australian tax on an asset you simply hold. Your own home is exempt everywhere and shares are not land, so your portfolio never meets it. An investment property does. On 700,000 of investment land it is nothing in New South Wales and about 2,850 a year in Victoria. Both states have frozen the point at which it starts, so it grows quietly as land values rise.
Your real tax is higher/up to $2,850 a year/anyone with an Australian investment property, and it depends entirely on which state it is in
Australians without private hospital cover pay an extra health charge of 1 to 1.5 percent of their income once it passes 101,000. It is all or nothing rather than a charge on the excess, so a single dollar over the first threshold costs 1,010. We never ask whether you hold hospital cover, so we leave it out entirely. Money drawn from super after 60 does not count towards the threshold.
Your real tax is higher/up to $1,010 a year/anyone without private hospital cover whose taxable income outside super passes 101,000
From July 2027 a capital gain made outside super is no longer halved: the gain left after inflation is stripped out is taxed in full, and we apply that change from that date. The same law also sets a minimum charge of 30 percent on that gain, with super funds exempt, and we do not apply the minimum, so for someone whose normal rate is below 30 percent gains realised outside super from that date are understated. One quirk of it we could not model either way: receiving any Age Pension at all during a year exempts you from the charge for that whole year.
Your real tax is higher/anyone realising gains outside super from July 2027 who receives no Age Pension that year
We treat every super pension as tax free, which is right for almost everyone at 60 or over. Two cases are not. An old public sector pension from an untaxed fund is taxed at your normal rates with a 10 percent offset against the bill, and a pension started before 60 is taxed with a 15 percent offset. If either is you, every tax figure here is far too low, because we show nothing where the law charges close to full rates.
Your real tax is higher/anyone with an untaxed-source public sector super pension, and anyone drawing super before 60
A defined benefit pension from a taxed fund is tax free at 60 or over only up to 131,250 a year. Half of anything above that is added to your taxable income. We cannot yet give this pension its own type, so the plan treats it as wholly tax free when entered as after tax, and fully taxable when entered as before tax.
Your real tax is higher/a retiree with a taxed-source defined benefit pension above 131,250 a year
An annuity you bought with savings outside super is taxed only on the part of each payment above a fixed yearly return of your purchase price. The return of price is the price, less any amount paid back at the end, spread over the term or over your life expectancy from the official life tables. We cannot yet split the payment this way. Entered as after tax, the plan shows no tax on it, and entered as before tax it taxes the whole payment, including your own money coming back.
Could go either way/a retiree with an annuity bought from a life company with money from outside super
While you are still saving, your super fund pays tax you never see: 15 percent on its earnings, about 10 percent on long held gains, and 15 percent on every contribution going in, with a further 15 percent on contributions if your income is above 250,000. The plan now takes 15 percent of each year's return out of super that is still saving, but at the full rate on every kind of return, so it overstates the tax on long held gains. The tax on contributions is still not charged: amounts you enter are what lands in the fund.
Your real tax is higher/anyone still building up super rather than drawing it
The credits attached to an Australian dividend only count if you held the shares at risk for 45 days around it, once your credits for the year reach 5,000. We assume you always qualify. If you buy and hold, you do. If you trade in and out around dividend dates, some of the credits we hand you would be refused and your tax here is too low.
Your real tax is higher/anyone trading in and out of Australian shares around their dividend dates
We let a loss on a rental property reduce the tax on the rest of your income. From July 2027 that stops for an existing home bought after May 2026: the loss can then only be set against rental income, with whatever is left carried into later years. A property you already owned in May 2026, or a newly built one, is unaffected. Where the restriction does apply, we show less tax than you would pay.
Your real tax is higher/anyone who buys an existing residential investment property after May 2026 and runs it at a loss
Separate tax systems, or rules that only bite outside a retirement plan.
Whatever Age Pension you entered is the amount we pay you. In reality it is cut back by your assets and by an assumed return on your savings, and an account-based super pension counts in full even though it produces no taxable income. The assets side alone withdraws 3 a fortnight for every 1,000 above the free area, about 7.8 percent a year of what it counts. It is a cut to your income rather than a tax, so no tax figure here moves, but far less money can reach you.
Could go either way/anyone counting on the Age Pension while also holding substantial savings
Australia has no wealth tax, no inheritance tax and no gift duty, so there is nothing of that kind for us to have left out. There is one charge on death we do not model: super left to an adult child, or to anyone else who was not a dependant, is taxed at 15 percent, or 30 percent on the part that came from an untaxed fund, plus the health levy. A spouse or a financial dependant receives it tax free. It falls on what you leave behind rather than on any year of your plan.
Could go either way/anyone planning to leave super to an adult child rather than to a spouse
We never ask which state you live in, and for everything on this page we do not need to. Income tax, the Medicare levy, capital gains tax, superannuation and the Age Pension are federal and identical everywhere, so a retiree in Perth and one in Hobart on the same income pay the same. The one Australian tax that does vary by state is land tax, and it only reaches an investment property.
Could go either way/nobody: income tax and the health levy are identical in every state
Aged care in Australia is charged partly on what you have: the fees are worked out from your income and your assets, super included. That is a cost of care rather than a tax, so nothing here charges it, and it only reaches your plan if you entered it yourself as a care expense. We did not research the figures, so we cannot tell you how large it gets. Reading this page as saying an Australian retirement costs almost nothing and stopping there would miss it.
Could go either way/anyone who ends up needing residential aged care
Every other figure we use for this country (117)
The sections above cover what shapes a retirement plan. These are the rest of what the model reads, listed so nothing it uses is hidden from you.
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foundordinary.brackets_from_year[2027-28].brackets[0][0]18200sourceordinary.brackets_from_year[2027-28].brackets[0][1]0sourceordinary.brackets_from_year[2027-28].brackets[1][0]45000sourceordinary.brackets_from_year[2027-28].brackets[1][1]0.14sourceordinary.brackets_from_year[2027-28].brackets[2][0]135000sourceordinary.brackets_from_year[2027-28].brackets[2][1]0.3sourceordinary.brackets_from_year[2027-28].brackets[3][0]190000sourceordinary.brackets_from_year[2027-28].brackets[3][1]0.37sourceordinary.brackets_from_year[2027-28].brackets[4][0]nullsourceordinary.brackets_from_year[2027-28].brackets[4][1]0.45sourceordinary.brackets_from_year[2027-28].name2027-28sourceordinary.brackets_from_year[2027-28].year2027sourceordinary.credits[LITO].nameLITOsourceordinary.credits[LITO].taper2_cumulativefalsesourceordinary.credits[SAPTO (single)].nameSAPTO (single)sourceordinary.credits[SAPTO 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Held but not used here (9)
These would scale a figure for a couple taxed together. This country taxes each partner separately, so the model never applies them, and they are not counted among the figures we could not source.
ordinary.credits[LITO].joint_multiple 2 ordinary.credits[LITO].taper_start_joint_multiple 2 ordinary.joint_mode splitting ordinary.social[Medicare levy (below SAPTO age)].allowance_joint_multiple 1.6864089107850486 ordinary.social[Medicare levy phase-in (below SAPTO age)].allowance_joint_multiple 1.6864089107850486 ordinary.social[Medicare levy phase-in (below SAPTO age)].ceiling_joint_multiple 1.6864089107850486 ordinary.social[Medicare levy senior phase-in].allowance_joint_multiple 1.3920439143399295 ordinary.social[Medicare levy senior phase-in].ceiling_joint_multiple 1.3920439143399295 ordinary.social[Medicare levy].allowance_joint_multiple 1.3920439143399295
Health levy, easing in for seniorsMedicare levy senior phase-in
For an older Australian the health levy does not arrive all at once. Across a band of income it climbs by 10 cents in every extra dollar, so it comes in gradually instead of as a jump.