Superannuation Taxes
Tax on Super
To help you save for your retirement, the Government provides a range of tax concessions and incentives through superannuation.
Super can be subject to tax on:
- Contributions (when contributions are made into your super account)
- Earnings (on the investments in super)
- Withdrawals
Tax on Contributions
All concessional (before-tax) contributions including company contributions and salary sacrifice amounts are taxed at a rate of 15%.
Non-concessional (after-tax) contributions are not subject to contributions tax as income tax has already been deducted.
Tax on Earnings
The investment earnings are taxed at a rate of up to 15%. This tax on investment earnings is reflected in the Credited Interest Rates which are declared on an after-tax basis.
No tax is levied on the investment earnings of assets backing pension liabilities. This applies to members in Division 9 and Division 14, where the Credited Interest Rate is declared on a gross of tax basis. More detail about the tax on investment income for Division 9 or Division 14 members is contained in the Product Disclosure Statements.
Tax on Withdrawals
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.
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 your preservation age and age 60: Nil on the first $160,000** 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 2010/11 income year and is indexed in line with Average Weekly Ordinary Time Earnings (AWOTE) in increments of $5,000 (rounded down).
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 (as if the income stream were salary).
Tax on Death Benefits
The tax payable on a death benefit is determined by:
- who the benefit is being paid to ('Dependants' or 'Non-dependants' as defined by the Tax Act)
- the tax components and tax status of the benefit
Tax on Death Benefits (paid as a lump Sum)
| Paid To | Tax Payable* |
|---|---|
|
Dependants You are a dependant of the deceased if at the time of their death you:
|
Nil |
|
Trustee of the deceased estate where beneficiaries are dependants of the deceased
|
Nil |
| Non-dependant of the deceased |
|
* Rates include the Medicare Levy of 1.5%
** An interdependency relationship exists where you and another person satisfy the following four requirements at the time of your death:
- you had a close personal relationship; and
- you lived together; and
- one or each provided financial support to the other; and
- one or each provided domestic support and personal care to the other of a type and quality normally provided in a close personal relationship (other than by a friend or flatmate)
*** The portion of the death benefit which represents the insured death cover provided by the Plan is an untaxed element
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. Refer to the respective Product Disclosure Statements under 'Tax on your Benefits' for more information.
Tax File Numbers
If you do not provide the Plan with your Tax File Number (TFN) your concessional contributions, will be taxed at 46.5 % (including Medicare Levy of 1.5%)
The Plan is not able to accept non-concessional (after-tax) contributions from you if you have not supplied your TFN.
