To encourage Australians to fund for their own retirement and lessen the dependence on the government age pension, various measures have been progressively implemented.

For further information on Superannuation in Australia click here. Incentive/compulsory elements:

• Concessional tax treatment of fund earnings
• Concessional tax rates on fund benefits paid
• Roll over of funds to maintain superannuation system status
• Deductions for certain contributions to superannuation
• A compulsory superannuation scheme for employers (see below)

• A restriction on early withdrawals

Taxation of superannuation
Superannuation funds have 3 concessional levels of taxing:

1. A contributions tax imposed on certain contributions received by the fund (15%)
2. A tax on earnings (15%)
3. A tax on withdrawals either as a lump sum or pensions

Superannuation Guarantee Scheme
Australia has a Federal Superannuation Guarantee Scheme, which requires all employers to provide employees with a minimum level of superannuation support in each financial year.

The required minimum rate of superannuation guarantee contributions for employees is 9%.

The scheme applies to employees over 18 and under 65 years of age who earns more than $450 per month. The definition of employee is extended under these rules to include a person who works under a contract that is wholly as principally for the labour of the person.