Key factors that affect how your super payout is taxed

I'm between my preservation age and 60 and will be paid a lump sum (taxed element)

How will the taxed element of my lump sum super benefit be taxed?

If you:

• are between your preservation age and 60, and
• receive a lump sum super benefit that includes or consists entirely of a taxed element

the taxed element is:

• included in your assessable income (even if the amount received is below the low rate cap amount and no tax has been withheld)
• subject to tax at your marginal rates (plus Medicare levy).

You will pay:

• no tax on amounts up to the low rate cap amount
• no more than 15% tax (plus Medicare levy) on amounts over the low rate cap amount.

In 2011-12, the flood levy may apply to this payment, where an individual's taxable income exceeds $50,000. We have published information to help you work out if the flood levy applies to you.

You will receive:

• a tax offset to ensure that the rate of tax payable is no more than 0% for taxed elements up to the low rate cap amount
• a tax offset to ensure that the rate of tax payable is no more than 15% (plus Medicare levy) for taxed elements over the low rate cap amount.

	The low rate cap is a lifetime cap which is reduced by any other taxed or untaxed elements you receive from any super payer after you have reached your preservation age (but not below zero). The low rate cap amount is indexed annually in accordance with average weekly ordinary time earnings. For the annual low rate cap amounts refer to Key superannuation rates and thresholds.
	If you receive a disability super benefit as a lump sum, your tax-free component is increased to broadly reflect the period where you would have expected to have been gainfully employed. The tax-free component of your benefit is always not assessable and not exempt income, that is, it is tax-free.

Example 1

Michael is 56 and receives for the first time a lump sum super benefit of $300,000 on 25 July 2011. His super fund tells him that this amount consists of a tax-free component of $100,000 and a taxable component of $200,000. The taxable component consists entirely of a taxed element.

Michael will include the $200,000 taxed element in his assessable income and pay the following tax:
Tax-free component: $100,000	no tax
Taxed element up to the low rate cap amount (The low rate cap amount for 2011-12 is $165,000)	0% tax
Taxed element over the low rate cap amount - $35,000	no more than 15% tax (plus Medicare levy)

If Michael receives any further lump sum super benefit payments, he must reduce his low rate cap amount by the offset amount previously received, $165,000.

In 2011-12, the flood levy may apply to this payment, where an individual's taxable income exceeds $50,000. We have published information to help you work out if the flood levy applies to you.

How do I fill in my tax return?

Sections within How the taxed element of your payout is taxed

• I'm under my preservation age and will receive a lump sum (taxed element)
• I'm under my preservation age and will be paid a pension or income stream (taxed element)
• I'm between my preservation age and 60 and will be paid a lump sum (taxed element)
• I'm between my preservation age and 60 and will be paid a pension or income stream (taxed element)
• I'm 60 or over and will be paid a lump sum (taxed element)
• I'm 60 or over and will be paid a pension or income stream (taxed element)