Did you know the tax you pay on your investments can vary depending on how you hold them – whether in your own name, through super, a trust or a company?
How your investments can grow
Investment returns generally come from two sources:
- Income – this could be interest, rent, or dividends from shares.
- Growth – this is the increase in value of your investment, also known as a ‘capital gain’.
These two sources of investment returns both potentially attract tax, and how much tax you pay depends on how you ‘hold’ these investments.
Where you ‘hold’ your investment matters
There are 4 common ways to hold investments in Australia, all under a different tax ‘structure’.
Each of these structures attracts a different tax treatment.
| Structure | Description | Tax you pay |
| Your own name | Money is invested in your own name using your tax file number, meaning you personally own the assets. | Your normal tax rate, from 0% through to 45% (plus Medicare levy). |
| Company | A more complex approach requiring the establishment of a new legal entity being a company. | A flat rate of 25-30%. |
| Trust | Also necessitates the establishment of a trust structure which is a new legal entity. | The income is passed through to a ‘beneficiary’ and tax is paid at the beneficiary’s normal tax rate. |
| Superannuation | Money that is contributed by your employer and any extra payments you make is invested in accordance with your instructions. | Between 0% and 15%. |
How investments are taxed
The two different ways you earn money through your investments attract a different type of tax:
- Tax on income – interest, rent or dividends are taxed in the year the income is received, at the rate of the structure in which it is held. In your own name it could be as high as 45%, in super it could be as low as 0%. By paying less tax on the same income, you get to keep more of it.
- Capital Growth – when an asset you hold increases in value and you sell it, you pay tax on that gain, again at the rate for your structure. The rules are changing from 1 July 2027, meaning your Capital Gains Tax liability is likely to be higher than it is today, so it’s worth understanding what this means for you.
The impact of tax over time on your investments
Let’s compare two options: say you invest $10,000 and it grows at 7% a year, with tax paid annually: 37% if held in your own name, 15% if held in super. The table below shows the impact tax can have on your investment returns over time.
This example is for illustrative purposes only and assumes a constant annual return of 7% and tax paid on investment earnings each year. Actual investment returns and tax outcomes will vary.
| Time | Balance of investment held in your own name (37% tax) | Balance of investment held in super (15% tax) | Difference |
| 1 year | $10,441 | $10,595 | $154 |
| 10 years | $15,396 | $17,824 | $2,428 |
| 20 years | $23,705 | $31,770 | $8,065 |
This is why it matters how much tax you pay. By investing the same amount, in the same investments, for the same period of time – one in super and one in your own name, over 20 years that is an extra $8,065 in your pocket rather than handing it over to the tax office.
The tax advantages of super
Paying less tax on your investments means more of your hard-earned money stays in your pocket, helping to maximise your investment returns over the long term. The amount of tax you pay within super will depend on a range of factors, including whether you’re saving for retirement or drawing an income stream. Learn more about how super is taxed.
How NGS Advice can help you understand tax and super
Whether you’re thinking about how you invest, reviewing your investment options or wanting to better understand how tax may impact your choices, we’re here to help.
Their enhanced advice offering makes it easier to access clear, practical support and advice digitally, over the phone or face-to-face.
This information is general information only and does not take into account your objectives, financial situation or needs. Before acting on this information, or making an investment decision, consider whether it is appropriate to you and read our Financial Services Guide, Product Disclosure Statements and Target Market Determinations available at ngssuper.com.au. You should also consider obtaining financial, taxation and/or legal advice tailored to your personal circumstances before making a decision. Issued by NGS Super Pty Ltd ABN 46 003 491 487 and AFSL 233 154.
