There are many types of Superannuation withdrawal tax.

It all depends on your age, the type of withdrawal and the makeup (tax components) of your balance.

Types of withdrawals include:

  • Pension withdrawals
  • Lump Sum withdrawals
  • Death Benefit withdrawals

Superannuation Withdrawal Tax – Pensions

Preservation Age to Age 60

If you are under the age of 60 an making super withdrawals in the form of pension payments, the tax that you pay will be determined by the tax components that make up your Pension Payment.

In Pension Phase, your pension balance will be either a ‘Taxable’ component or an ‘Exempt’ component or, more likely, a combination of both.

Each pension payment will be drawn proportionately from each component.

Superannuation Withdrawal Tax

The Exempt component will be received completely tax free.

The Taxable component will be taxed at your Marginal Tax Rate (MTR). However, you will receive a tax offset equal to 15% of the Taxable portion of the pension payment.

Over Age 60

All pension income received by those over the age of 60 is received completely tax free, excluding a Taxable (Untaxed) component.

Superannuation Withdrawal Tax – Lump Sums

Preservation Age to Age 60

The first $180,000 that you withdraw as a lump sum from the ‘Taxable component of your superannuation account is received tax free. This is a lifetime limit and does not ‘reset’ each year. However, is is an indexed amount, meaning it will increase annually and rounded to the nearest $5,000.

Once you have used up this $180,000, whether it be in one year or over a number of years, all Taxable portions of any additional lump sum withdrawals will be taxed at 15%.

The Exempt component of any lump sum withdrawals is received tax free.

Over Age 60

All lump sum withdrawals from superannuation will be received tax free for those over age 60, excluding a Taxable (Untaxed) component.

Superannuation Withdrawal Tax – Taxable (untaxed) Component and Death Benefits tax

The Taxable (untaxed) Component is not too common within a superannuation account these days. However, it will often be found in a superannuation member balance of a deceased member who had life insurance.

Find out more about holding insurance within super.

It can also result from Defined Benefit accounts.

 

If this article has not helped you, I have constructed an Ultimate Guide to Tax on Superannuation. Keep in mind that you should always consult a tax adviser in relation to your tax matters, as each individual circumstance is different.

A quick phone call to your superannuation provider will give you specific information on the tax components associated with your account. Be sure to have your account or member number on hand before calling to make the process easier.

If you would like anything clarified or have any further questions about Superannuation Withdrawal Tax or any other topics, please do not hesitate to leave a comment in the section below.

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Chris Strano

Chris Strano is a specialist independent superannuation author for SuperGuy.com.au - one of Australia's leading superannuation information resources.

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