Super funds have been known to make mistakes and pay too much tax on behalf of their members so check your statements carefully to make sure the tax you’re paying makes sense.


A recent example of how superannuation funds can make taxation errors was Mercer Wealth Solution’s need to reimburse $26m to 40,000 members after it over-paid capital gains tax.


Mercer discovered the problem during a periodic review in 2010 and informed both APRA and the ATO that it had made a mistake in calculating its capital gains tax liability in some investment options.


If Australia’s biggest corporate super master trust can over-pay taxation on behalf of its members, its possible that other funds can also make mistakes. So how can you keep an eye on the tax that’s being paid by your super fund to make sure it’s not being too generous to the tax man?


How much should you pay?


The first step is to understand how tax on super is calculated. The first “hit” comes out of contributions, which are all taxed at 15%. Then any earnings made by the fund will also be taxed at 15%.


The good news is that, if you stick within the rules, the money you take out of super from age 55 will not be taxed (it used to be).


Capital gains tax makes things a bit complicated for the super fund bean counters attempting to determine how much tax they need to pay in any given year.


That will depend on the number of assets they sell, how long they’ve held each asset, thresholds, the method of calculation used and the actual capital gain made. When you consider that super funds regularly buy and sell investments to ensure their spread of investments stays appropriate for members, the number of CGT calculations they have to do in any one year could be immense.


How can you check you’re paying the right amount?


Have a look at your quarterly or six-monthly super statements carefully to make sure the tax that’s been deducted makes sense. Any sudden jump from one statement to the next may indicate an error.


If you do think your fund has made a mistake, call them to check.