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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.

    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: 28 Nov 2018QC 23237