Difference Between A Superannuation Fund and a Share Fund

Both of these terms can be easily confused because they are both managed funds, but they do have some essential differences. A superannuation fund is a taxation vehicle while a share fund is an investment vehicle.

A superannuation fund is a pension program that is created by a company for its employees. They are also referred to as a company pension plan. Money deposited in this fund will grow without any tax implications until the employee retires or withdraws.

A share fund gathers money from investors (who can invest within their superannuation fund) and invests it underlying assets. For example XCV will pool money from investors and invest it in shares.

The difference in taxation will depend if the investment was made within a superannuation fund. Inside it, all profits are taxed within the superannuation fund, generally at 15 percent. Because they are taxed within a super fund, returns are excluded from your personal tax calculations. On the other hand if you invest outside your super fund, the returns will be included in your tax return and you have to pay tax at marginal rates.