Tax treatment of income earned on Fund assets
The table below generally describes the taxation of assets held in your account.
| Point of tax | Rate of tax |
|---|---|
| Investment earnings | 15% |
Benefits paid after turning 60
If you are aged 60 or more, superannuation benefits that you receive from the Fund are tax free.
Benefits paid before turning 60
If you are under 60, the tax treatment depends on your age and on the benefit's tax components.
Lump sum payments from superannuation are generally made up of two components, tax free and taxable.
Whenever you withdraw or rollover a lump sum from your account, the tax components of the lump sum will be determined under the proportioning rule based on the tax free and taxable components of your account at the time of payment.
The general tax treatment of lump sum benefits paid to you is summarised in the table below.
Tax treatment of lump sum withdrawals
| Taxpayer's age | Tax free component | Taxable component |
|---|---|---|
| Under preservation age: | Tax free | 21.5%1 |
| Preservation age to age 59 (inclusive): | Tax free | Amount up to low rate cap ($150,000 in 2009/20102) – 0% |
| Amounts over low rate cap – 16.5%1 | ||
| Age 60+: | Tax free | Tax free |
1 This rate includes the Medicare levy of 1.5%.
2 The threshold is indexed annually with AWOTE and rounded down to the nearest $5,000.
In some cases, superannuation benefits are taxed under special arrangements. For example, a benefit that qualifies as a disability superannuation benefit may qualify for additional tax concessions. Lump sums paid to you because of a terminal medical condition are tax free in certain circumstances. If you are a temporary resident and you withdraw a lump sum on your permanent departure from Australia, special tax rates apply.
