Tax on Superannuation Taxable Component

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6 Comments

  1. John

    Hi Chris, my Super consists of a large amount of rolled in contributions from my wife when she was earning a very large salary, and hence these amounts were taxed before they were rolled in at 30%, not the usual 15%. Are those already higher taxed contributions also taxed at MTR less 10% when taking an income from them when over 60?

    So if after I’m 60, my marginal tax rate is 45%, I would still be paying another 35% tax after the 10% offset, meaning overall that money has been taxed at first 30%, then at 35% when taken as income?

    Or have I got this completely wrong?

    Reply
    • Chris Strano

      Hi John, I’m not quite sure how your wife’s contributions became part of your super? However, generally, contributions that were taxed upon entry to super (taxable (taxed)) are not taxed when withdrawn from super over age 60 – only when under age 60. If under age 60, taxable (taxed) contributions are taxed at the recipients marginal tax rate, less a 15% offset.

      Based on your age, presumed income and large super balance, I would strongly suggest obtaining professional personal financial advice prior to implementing any strategies to ensure you are not only taking advantage of all opportunities available to you, but also to ensure you don’t make any costly errors.

      Regards,
      Chris

      Reply
      • John

        Hi Chris, you’re right, I don’t understand it at all. My wife received approx $40k per year in Super from her employer (far more than they were required to pay). She then rolled in 85% of her max Super allotment (usually $25k) into my Super account. I think I do need some advice, I’m reading above that there is tax payable on some Super pension, even if I’m over 60? I thought all Super pensions was tax-free after 60? I don’t get it.

        Reply
        • Chris Strano

          Hi John,
          Okay, this makes more sense. Her contributions were transferred to you under the spouse split provisions.
          Generally, payments from super over age 60 are tax free. However, in some instances tax may be payable, depending on the tax components that make up your balance.
          I don’t believe the portion transferred from your wife will incur tax upon withdrawal.
          If you like, feel free to contact us to arrange a free 15-minute obligation free chat to see if personal advice would be suitable for you https://www.torowealth.com.au
          Regards,
          Chris

          Reply
  2. Jennifer

    Hi Chris
    I withdraw a lump sum from my superannuation account via telephone.
    I was not asked if this amount was to be included as part of my compulsory income stream !
    Has my fund acted appropriately? As I assumed it would account as part of my pension/income stream
    Thank you

    Reply
    • Chris Strano

      Hi Jennifer,
      A lump sum withdrawal from a pension account can be made as a ‘partial pension commutation’ or as a ‘one-off increased pension payment’. I am unable to comment on whether your super fund has acted appropriately or not. I suggest you refer to your super fund’s Financial Services Guide and follow their complaints resolution process if you are not happy with what has occurred.
      I hope your issue gets resolved.
      Regards,
      Chris
      Related Post
      What is a Pension Commutation?

      Reply

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