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  • Tax on benefits

    How tax applies to your super benefits depends on a number of factors, such as your age and whether your super comes from a taxed or untaxed source.

    The tax treatment of both super and death benefits is also affected by whether the benefits are paid:

    • as a lump sum or
    • income stream – which are regular payments paid from an account-based income stream or a capped defined benefit income stream.

    On this page:

    Tax on withdrawing your super

    Tax on your super benefits is generally taxed at your marginal tax rate, however this varies depending on several factors, including:

    • your preservation age and the age you will be when you get the payment
    • whether the money in your super account is taxable or tax-free
    • whether you will get the payment as an income stream or lump sum
    • the type of income stream.

    These factors determine whether you:

    • pay tax on the withdrawal (for example, whether it is taxable income)
    • get tax offsets that reduce the amount of tax that you pay.

    Generally, your super benefits will include both a tax-free and a taxable component.

    See also:

    Tax on death benefits

    The tax on a death benefit depends on:

    • whether you were a dependant of the deceased
    • whether it is paid as a lump sum or income stream
    • whether the income stream is an account-based or a capped defined benefit income stream
    • whether the super is taxable or tax-free and whether the super fund has already paid tax on the taxable component
    • your age and the age of the deceased person when they died.

    If you are a dependant of the deceased, you do not need to pay tax on the taxable component of a death benefit if you receive it as a lump sum. If you receive the benefit as an income stream, different rates of tax may apply depending on the factors mentioned above.

    If you are not a dependant of the deceased you can only receive the benefit as a lump sum. The taxable component of the payment will be entitled to a tax offset that ensures that the rate of income tax is as follows:

    • taxed element - maximum of 15% plus Medicare levy
    • untaxed element - maximum of 30% plus Medicare levy.

    See also:

    Last modified: 11 Oct 2018QC 23237