Tax on an Income Account in Gateway

Withdrawals from an Income Account in Gateway are made up of two components: a tax-free component and a taxable component.

No tax is payable on any tax-free component.

The taxable component will be taxed according to the table below. Qantas Super must withhold tax from the taxable component at the applicable rates, which vary depending on your age at the time of payment.

If you are under age 60 it is important that you give us your tax file number (TFN). If we do not have your TFN, tax will be deducted from your income payments at the top marginal tax rate plus Medicare levy without reduction for the 15% tax offset. However providing your TFN is not mandatory.

How much you are taxed (if at all) on the regular income payments you receive from your Income Account in Gateway depends on your age and the amount of payments you receive.

¹The Medicare levy is currently 2%.

²A 15% tax offset may apply if the income payments are as a result of a Permanent Incapacity benefit and two medical practitioners have certified that, because of ill-health, you are unlikely to ever be able to engage in gainful employment again for which you are reasonably qualified through education, experience or training.

³This rate includes the Medicare levy which is currently 2%.

⁴Some higher income taxpayers and families without qualifying private hospital insurance cover also pay a Medicare levy surcharge. Some taxpayers do not pay Medicare levy or pay it only at a reduced rate

Investment earnings from assets supporting Income Accounts in Gateway are tax free. Transition to retirement income streams are taxed at 15% on earnings.

You can withdraw lump sum amounts in addition to your regular income payments from your Income Account in Gateway at any time (conditions apply). Any withdrawal is also made up of a tax-free component and a taxable component.

The tax that applies is as follows:

• If you are age 60 or over: whole amount is tax free.
• If you are under age 60:
  • Tax-free component: Nil
  • Taxable component – taxed element: Nil on the first $245,000¹ and 17%² on the balance.
  • Taxable component – untaxed element: the lower of your marginal tax rate or 32%, subject to all of your lump sum benefits being under the untaxed plan cap.

Any decision to make a lump sum withdrawal from your Income Account will affect the duration of your income payments. The more you withdraw, the less you may have for future income stream payments.

¹Indexed in line with changes in Average Weekly Ordinary Times Earnings (AWOTE) in increments of $5,000, and reduced by the taxable components of lump sum amounts previously received from Qantas Super or another fund since reaching preservation age.
²This rate includes the Medicare levy which is currently 2%.

If you have a valid reversionary beneficiary nomination in place when you die, your reversionary beneficiary will continue receiving regular income payments from Qantas Super unless they elect to receive your death benefit as a lump sum (see below).

Tax will generally be withheld from the income payments to the reversionary beneficiary at the rates shown in the table below:

³Age at the time an income payment is made to your reversionary beneficiary

Death benefits paid to dependants (as defined under tax laws) as a lump sum are tax-free.

Death benefits paid to a non-dependant (under tax laws) as a lump sum may be subject to tax of up to 32% (including the Medicare levy). Note: An adult child is not a ‘dependant’ for these tax purposes unless the child is actually dependent on you at the time of your death (e.g. dependent on financial support) or otherwise in an interdependency relationship with you.

Tax will generally be withheld at the rates shown in the table below:

¹Tax on a portion of the taxable component paid to a non-dependant may need to be withheld at 32%.
²Some higher income taxpayers and families without qualifying private hospital insurance cover also pay a Medicare levy surcharge. Some taxpayers do not pay Medicare levy or pay it only at a reduced rate.

If some or all of your death benefit is paid to your legal personal representative, the tax payable will depend on who the benefit is ultimately paid to (a dependant or non-dependant under tax laws). The appropriate tax is a matter for your legal personal representative to determine. Qantas Super is not required to withhold tax from lump sums paid to a legal personal representative.

The tax-free and taxable components of a death benefit before adding any anti-detriment payment are paid proportionately from your account. Any anti-detriment payment is added solely to the taxable component.

Your Income Account in Gateway is usually taken into consideration when determining the amount of Centrelink/ Department of Veteran Affairs (DVA) Age Pension entitlements you may be entitled to. We recommend you speak to a licensed financial adviser about how an Income Account in Gateway may impact your Centrelink/DVA entitlements.