Superannuation is Australia’s compulsory retirement savings system, established and regulated under federal legislation. Every employer must contribute a minimum percentage of each eligible employee’s ordinary time earnings into a super fund. The contributions are invested in a pooled or individually directed portfolio and grow over time, accessed either at retirement (for permanent residents and citizens) or on departure from Australia (for eligible temporary visa holders through DASP).

Super funds come in several varieties. Industry funds — AustralianSuper, Hostplus, REST, HESTA — are not-for-profit and historically strong performers. Retail funds — offered by banks and financial institutions — provide more flexibility but sometimes carry higher fees. Self-Managed Super Funds (SMSFs) give complete investment control but require active management and ongoing compliance — not typically relevant for NRIs on short-term assignments.

For most Indian employees, the employer nominates a default fund. You can direct contributions to your own chosen fund using a standard fund choice form — useful if you have an existing fund from a previous Australian job and want to consolidate.

The Super Guarantee (SG) is the legislated minimum contribution employers must make on eligible employees’ behalf. It applies to ordinary time earnings — your base salary, regular commissions, and most allowances. It does not apply to overtime payments.

The SG is paid on top of your salary — not deducted from it. A $95,000 salary means the employer contributes $11,400 in super separately. Your take-home is based on $95,000 minus income tax; the $11,400 goes directly to your fund.

The Maximum Contribution Base — A Cap Most NRIs Do Not Know

Employers are only obligated to pay SG on earnings up to the maximum contribution base: $62,500 per quarter ($250,000 annualised) for FY 2025-26. If you earn $280,000, the mandatory SG applies only to $250,000 — your employer’s minimum obligation is $30,000, not $33,600. High earners should be aware of this ceiling.

Concessional Contributions — Pre-Tax, Capped at $30,000

Concessional contributions are before-tax contributions taxed at 15% inside the fund. Three categories count towards this single combined cap:

• Employer SG (mandatory 12%)
• Salary sacrifice (voluntary additional pre-tax contributions arranged with your employer)
• Personal contributions you intend to claim as a tax deduction (you must file a notice of intent with your fund before lodging your return)

All three combined cannot exceed $30,000 in FY 2025-26. If your SG is $18,000 (12% of $150,000), you have $12,000 of cap space remaining for salary sacrifice or personal deductible contributions.

Non-Concessional Contributions — After-Tax, Capped at $120,000

Personal contributions made from money you have already paid income tax on. No additional tax on entry. Useful for building retirement savings beyond the concessional cap or for lump-sum deposits. The $120,000 cap applies if your total super balance (TSB) was below $2 million at 30 June 2025. Above $2 million, the non-concessional cap is nil.

The three-year bring-forward rule allows you to contribute up to $360,000 in a single year (three years’ worth) if you trigger it in the first year of the window, subject to your TSB being below $2 million.

Government Co-Contribution

If your total income is below approximately $45,400 and you make a personal after-tax contribution, the government matches it dollar-for-dollar up to $500. The benefit phases out between $45,400 and $60,400. For Indians in this income range — some students, junior professionals — it is a straightforward bonus for a modest personal contribution.

Carry-Forward Rule

If your super balance was below $500,000 at 30 June 2025 and you had unused concessional cap in any of the prior five years, you can carry forward that unused amount and contribute more than $30,000 this year. Relevant for NRIs who had gaps in Australian employment or lower-earning years in the past.

The fundamental appeal of super is the 15% flat tax rate on contributions and investment earnings inside the fund — compared to personal marginal rates that reach 37% and 45% for higher earners. For most working NRIs, this difference is substantial and compound over time.

Note: The existing blog version of this article showed 19% for the $18,201–$45,000 bracket and 32.5% for the next bracket. Both are incorrect for FY 2025-26. The Stage 3 tax cuts, effective from 1 July 2024, changed these rates to 16% and 30% respectively. These corrected rates are reflected in the table above.

Division 293 — High Earners Pay More

If your combined income and concessional super contributions exceed $250,000, an additional 15% tax applies to the lower of: (a) the concessional contributions, or (b) the amount by which combined income and contributions exceed $250,000. This brings the effective super tax from 15% to 30% for the affected amount. Still lower than the 45% marginal rate — but the advantage narrows. The ATO calculates this automatically after your return is lodged and issues a separate Division 293 assessment.

Investment Earnings Inside Super

Beyond the contribution tax advantage, earnings inside super are also taxed favourably. Investment income taxed at 15%. Capital gains on assets held more than 12 months: taxed at an effective 10% (one-third discount on the 15% rate). In pension phase (after meeting retirement conditions), earnings are completely tax-free. Compare this to holding the same investments personally — a 37% marginal rate taxpayer pays 37% on dividends and approximately 18.5% on discounted long-term capital gains outside super.

Salary sacrifice is an arrangement where you and your employer agree to reduce your pre-tax salary by an amount that is instead contributed to super as a concessional contribution. Your taxable salary falls, your super balance grows, and the tax saved is the difference between your marginal rate and the 15% super tax.

Scenario 1 — Permanent Residents and Citizens: Age 60

Preservation age is 60 for anyone born after 1 July 1964. After reaching preservation age and meeting a condition of release — either formally retiring, or simply turning 65 regardless of work status — withdrawals are completely tax-free. Both lump sum and pension-phase withdrawals are tax-free in this scenario. This is one of the most generous retirement tax provisions available anywhere in the developed world.

Scenario 2 — Temporary Visa Holders: DASP on Departure

For Indians on temporary visas — 482, 457, 485, student visas with work rights — DASP is the mechanism for recovering the accumulated super balance after permanently leaving Australia.

Example 1 — IT Professional, Sydney, 4 Years (482 Visa)

Vikram, salary $110,000 across 4 years (blended SG rate approximately 11.75% over the 4-year period). Employer SG: approximately $51,700 total contributed. Fund investment growth (assumed 7% average net): total balance at departure approximately $58,500. Salary sacrifice: $8,000/year × 4 years = $32,000 additional (after 15% super tax: $27,200 net into fund). Total super balance: approximately $58,500 from SG + $27,200 from sacrifice = approximately $85,700.

Without salary sacrifice, the super balance would have been approximately $58,500 and the net DASP approximately $38,025. The salary sacrifice added approximately $17,680 to the net DASP received — and saved $1,600 per year in income tax along the way.

Example 2 — Doctor, Melbourne, Building Retirement Super (PR)

Dr. Priya, $185,000 salary. Employer SG (12%): $22,200. She salary sacrifices $7,800 to reach the $30,000 cap exactly. She is on permanent residency and will retire in Australia.

At age 60, Dr. Priya withdraws her accumulated super — estimated at $1.8 million after 28 years at current contribution levels and 7% net growth. Tax payable on withdrawal: zero. The same savings invested in a personal investment portfolio would have generated annual dividend tax and CGT along the way, leaving significantly less after lifetime tax.

When you receive DASP and return to India, the Indian tax treatment depends on your Indian residential status in the year of receipt.

If You Are an NRI in the Year of DASP Receipt

Under Section 5(2) of the Indian Income Tax Act, income received outside India by an NRI is not taxable in India — provided it is received in a foreign (Australian) bank account. If you receive DASP into an Australian account in a year when you are still classified as an NRI for Indian tax purposes, it is generally not taxable in India at all. Coordinate the timing of your DASP claim with your Indian residency status — your CA can advise on the specific year.

If You Are a Resident Indian in the Year of DASP Receipt

Worldwide income is taxable for Indian resident taxpayers. DASP received would be declared in Schedule FSI (Foreign Source Income) in your ITR-2. You can then claim credit for the Australian DASP tax already paid under Section 90 of the Indian Income Tax Act via Form 67. The credit is capped at the Indian tax on that income — so if the Australian rate (35%) is higher than your Indian marginal rate, you pay nothing extra in India. Form 67 must be filed on or before the Indian ITR due date. Filing it late results in the credit being rejected.

Not providing TFN to employer or super fund:
Without a Tax File Number, employers must withhold 47% tax on super contributions — the top marginal rate. This dramatically erodes contributions. Provide your TFN to both employer and super fund on your first day. If contributions have already been made without TFN, contact the fund — TFN can be provided retrospectively and excess withholding can be reclaimed.

Multiple accounts from multiple employers:
Every job change where you did not provide existing fund details creates a new super account. Three jobs over four years can mean three accounts, each charging administration fees separately. Consolidate via myGov → ATO → Super → Consolidate Accounts. Check for exit fees before consolidating — some older funds charge them. Active consolidation typically saves hundreds per year in fees and simplifies your DASP claim significantly.

Exceeding the $30,000 concessional cap:
The cap covers all concessional contributions combined — employer SG plus any salary sacrifice plus any personal deductible contributions. If you set up salary sacrifice without accounting for the SG your employer is already paying, you can breach the cap without realising it. Excess concessional contributions are included in your assessable income at your marginal rate plus an excess concessional contributions charge. Always calculate the remaining cap space before arranging additional contributions.

No binding death benefit nomination:
Without a valid binding death benefit nomination, the fund trustee decides who receives your super on death. Non-binding nominations are advisory only. For NRIs whose family is in India, ensuring a valid binding nomination exists — and that it names dependants who qualify under Australian law — is important. Adult parents in India generally do not qualify as dependants under Australian super law; the position is more nuanced for spouses. Get advice from a super specialist if your circumstances are cross-border.
DASP — Complete Claim Guide for Indians Leaving Australia