Retirement savings accounts and your superannuation

What is a retirement savings account?

A retirement savings account (RSA) is an account offered by banks, building societies, credit unions, life insurance companies and prescribed financial institutions (RSA providers). It is used for retirement savings and is similar to a superannuation fund.

RSAs are capital guaranteed. This means that contributions and interest on the account can only be reduced by fees and charges. RSAs are fully portable. This means that the balance of the account can be transferred to another RSA or superannuation provider at your request.

Who can open an RSA?

Any person may open an RSA. In addition if certain conditions are satisfied, employers may open an account in the name of an employee. An application to open an RSA can be obtained from an RSA provider.

Generally, if an employer opens an RSA on your behalf a 14 day cooling off period applies. During that period, if you choose you may transfer the balance of your account to another superannuation product without a reduction for fees and charges.

Who can pay money into an RSA?

You or your employer can make contributions to your RSA.

If you have a Superannuation Holding Account Reserve (SHAR) account balance, you can ask the Tax Office to transfer the amount to your RSA.

If you make voluntary contributions from your after-tax salary (by having your employer deduct an amount from your after-tax salary), your employer must pay the amount deducted into your RSA account within 28 days after the end of the month in which the deduction was made.

Will contributions to the RSA be tax deductible?

Contributions by your employer to an RSA will be tax deductible to your employer up to certain limits and will count towards your employer's superannuation guarantee obligations.

Will personal contributions to an RSA be eligible for the Super Co-contribution?

For more information see Super Co-contribution.

When can I access the money in an RSA?

Generally, an RSA provider will only pay benefits from your account if you have reached at least age 55 and retired. Benefits may be paid earlier than this on your death, permanent disability or in other circumstances such as severe financial hardship.

Any benefit which is payable on your death will be paid to your estate or you may be able to nominate on the RSA contract a dependant to whom the money will be paid.

Benefits must be paid out from your RSA if you are aged between 65 and 75 and are not gainfully employed on either a full-time or a part-time basis. Benefits must be paid out if you have attained age 75 and are not gainfully employed on a full time basis.

The rules applying to your RSA will tell you whether you can take your benefit in a lump sum or as a pension or annuity.

Your RSA provider or the Australian Prudential Regulation Authority (APRA) on 1300 131 060, can advise you further about access to benefits in your RSA.

From 1 July 2002, people who have entered Australia on an eligible temporary resident visa and who subsequently permanently depart Australia will be able to receive payment of any superannuation they have accumulated. For more information see Departing Australia superannuation payment essentials.

What fees and charges are payable on RSAs?

Your RSA provider must inform you of the fees and charges which apply to your account. This may include account keeping fees and exit fees.

However, if the balance of the account is less than $1 000, the fees and charges are not permitted to exceed the interest credited to the account. The only exception to this is for the payment of insurance premiums and tax.

Are contributions and earnings taxed in an RSA?

Your RSA provider is subject to a rate of tax of 15% on the contributions made by employers, other tax deductible contributions and roll-overs or transfers of benefits from untaxed sources. In addition, interest credited to the RSA is taxable at 15%. In some cases the interest credited may be net of tax.

If you receive a pension or annuity from an RSA, the RSA's investment income which provides the pension or annuity is generally exempt from tax.

The superannuation contributions tax (surcharge) that applies to high income earners is also payable on contributions made to an RSA. From 1 July 2003, the superannuation and termination payments surcharge rates will be reduced from 15% to 10% over a period of 3 years. Accordingly, the maximum surcharge rates will be reduced to:

14.5 per cent in 2003-04
12.5 per cent in 2004-05
10 per cent in 2005-06 and each later financial year.

For more information on how the surcharge works see The superannuation contributions surcharge and the termination payments surcharge (NAT 15263) and The superannuation contributions surcharge (NAT 15264).

Are benefits paid by an RSA taxed?

Any lump sums, pensions or annuities received by you from an RSA are concessionally taxed but must be included in your tax return in the year of receipt.

If you receive a lump sum, the RSA provider will send you details of the payment. Lump sums are taxed at concessional tax rates provided they are within your Reasonable Benefit Limit (RBL).

Pensions or annuities received by you are taxed as normal income. However, provided they are within your RBL, a tax offset of 15% may apply on that part which is assessable.

Your RBL is the maximum amount you can receive and still obtain concessional tax treatment on lump sums, pensions or annuities.

If the total of the amounts you have received exceed your RBL:

the excess of any lump sum is taxed at the highest personal rate plus Medicare levy
the amount of any pension or annuity which is eligible for the offset is reduced.

Do I need to quote my tax file number (TFN)?

If you quote your TFN then the contributions received and benefits paid by the RSA will be taxed as above.

However, if you do not quote your TFN the RSA provider must withhold tax at the highest marginal tax rate (plus Medicare levy), when you withdraw your benefits.

TFNs can be given to your RSA provider by you or your employer (if authorised by you).

The Privacy Act 1988 applies to RSAs, which means that strict penalties apply to employers or superannuation providers who misuse your TFN.

What if I have a problem with my RSA?

You should contact your RSA provider first as they are required to appoint a complaints officer who can deal with the problem. Any complaint must be dealt with within 90 days after it has been made.

If you are not satisfied with the decision, you or a representative for your estate may be able to make a formal complaint to the Superannuation Complaints Tribunal (SCT) by calling 1300 884 114.

Need more information?

For further information on this topic:

phone our information line on 13 10 20, or
write to:

Australian Taxation Office
Superannuation Business Line
PO Box 277
WTC VIC 8005

If you do not speak English well and want to talk to a Tax Officer, phone the Translating and Interpreting Service on 13 14 50 for help with your call.

People with a hearing or speech impairment with access to appropriate teletypewriter (TTY) or modem equipment, phone 13 36 77. If you do not have access to TTY or modem equipment, phone the Speech to Speech Relay Service on 1300 555 727.

Last Modified: Friday, 2 July 2004

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