Tax on super benefits

How tax applies to your super benefits depends on your age, the source of your super, and how benefits are paid.

On this page

• Tax on withdrawing your super
• Tax on super death benefits
• Tax on military invalidity benefits

Tax on withdrawing your super

The rate at which your super benefits are taxed will depend 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 a 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 you pay.

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

For more detailed information about withdrawing your super, see:

• Super withdrawal options
• Withdrawing and using your super
• Transfer balance cap – capped defined benefit income streams

Tax on super death benefits

The tax on a super death benefit depends on whether:

• you were a dependant of the deceased
• it is paid as a lump sum or a super income stream benefit
• the income stream is an account-based or a capped defined benefit income stream
• 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're 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 the rate of income tax is as follows:

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

Tax on military invalidity benefits

Due to the Full Federal Court decision in Commissioner of Taxation v Douglas [2020] FCAFC 220, the tax and superannuation treatment of specific invalidity benefit payments has changed.

To find out more about the treatment of military benefits, see Treatment of military invalidity benefits following Full Federal Court decision.