Superannuation Taxes
Tax on Super
Superannuation in Australia is taxed at different points. From 1 July 2007, the tax on superannuation was simplified. This information describes the tax that applies after 1 July 2007.
Tax on Contributions
All concessional contributions are taxed at 15%. If the Plan does not have your Tax File Number your concessional contributions will be taxed at 45% plus the Medicare Levy.
No tax is paid on Non-Concessional Contributions.
Tax on Earnings
There is a 15% tax on the investment returns of the Plan, although some offsets such as imputation credits may apply. This tax on investment returns is reflected in the Credited Interest Rates which are declared on an after-tax basis.
No tax is levied on the income of assets backing pension liabilities. This includes members in Division 9 and Division 14, where the Credited Interest Rate is declared on a gross of tax basis. More details about the tax on investment income for Division 9 or Division 14 members is contained in the Product Disclosure Statement for the respective Division.
Tax on Lump Sum Benefits
If you take any part of your benefit in cash after age 60, no tax will be payable.
Prior to age 60 some tax may be payable. This tax will be deducted from your benefit by the Plan. With your benefit details you will receive completed documentation regarding the tax deducted from your benefit.
For taxation purposes, your superannuation benefit will be divided into two parts as follows:
| Component | Component Description | Tax you pay |
|---|---|---|
| Tax Free Component |
Your crystallised (tax free) component at 1 July 2007 plus any non-concessional contributions made after 1 July 2007. |
Nil |
| Taxable Component |
The balance of your benefit |
The amount of tax depends upon the age you receive the benefit: If you are age 60 or older: Nil If you are between age 55 and your preservation age: Nil on the first $145,000** and 16.5%* on the balance If you are age less than your preservation age: 21.5%* |
* This rate includes the Medicare Levy of 1.5%
** This amount is the threshold for the 2008/09 financial year and will change with increases in Average Weekly Ordinary Time Earnings (AWOTE) in $5,000 increments.
Tax on Disability Income Benefits
Where a temporary disability benefit is paid as an income stream, tax will be payable by the member as income tax (is if the income stream were salary). The member will be entitled to a 15% tax offset.
Tax on Death Benefits
Death benefits paid to dependants (as defined under tax laws) will be tax free. Death benefits paid to a non-dependant (as defined under tax laws) will be taxed at 15% plus Medicare Levy.
Tax on Pensions
Pensions and Flexible income streams paid from Division 9 and Division 14 will be subject to tax where the payments are made prior to age 60. Details on benefits tax are contained in the respective Product Disclosure Statement.
