Superannuation money is taxed at three different times during its life.
Contributions: when it goes into the fund.
Investment Earnings: while it is in the fund.
Super Withdrawals: when it leaves the fund.
Tax on contributions
Employer and salary sacrificed contributions are taxed at 15%.
Personal after-tax contributions and those received under the government’s co-contribution scheme are not taxed.
No Tax is payable when funds are transferred switching funds.
Tax on investment earnings
Investment earnings in the fund are taxed at a maximum rate of 15%.
Fund earnings treated as Capital gains are taxed at 10%.
Tax on withdrawals
Taking Super as an Income Stream
If you are aged 60 or over your income will usually be tax-free.
If you are under age 60 you may pay tax on your super pension.
Lump sum withdrawals
At age 60 or over any withdrawals from a taxed super fund are normally tax-free.
Some funds, such as government super funds are tax free funds, and may not be tax-free on withdrawal.
Under age 60 you may pay tax on withdrawals.
There is a low rate threshold, which can be paid tax-free. This is indexed annually.
The threshold does not include the tax-free portion of your super account, which will be returned to you tax-free.
Any amounts over the low rate threshold will be taxed at 16.5% (including Medicare Levy).
Under age 55, the lump sum will be taxed at 21.5%. (There are limited circumstances under which you can access super before age 55).
We recommend you seek financial advice before making a decision to withdraw funds from your super.
Details quoted are at March 2013, and subject to changes.
- www.moneysmart.gov.au/superannuation-and-retirement Australian Securities and Investments Commission (ASIC)
- www.ato.gov.au/super Australian Tax Office