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Taxation of super benefits

Determining the tax-free and taxable proportions of super benefits

Section: 7.10

The tax-free and taxable proportions of a super benefit are determined by the tax-free and taxable proportions of the super interest from which it is paid.

The super interest and the taxable and tax free proportion of the interest are valued at different times as shown in the table below, depending on whether the interest is an accumulation interest or an income stream.

Once the tax-free proportions and the taxable proportions are determined, they are applied to the lump sum being paid. Different timing applies to the calculation of tax free and taxable proportions of lump sums paid due to the commutation of a superannuation income stream.

Superannuation interest benefit is paid from Benefit type Time of valuing and proportioning interest
Superannuation income stream (including TTRs and deferred superannuation income streams that have commenced to pay income stream benefits) Income stream payments

Lump sum commutations

When the income stream commenced
Superannuation accumulation phase Lump sum commutations Just before the lump sum is paid
Deferred superannuation income stream before income stream payments commence Lump sum commutations Just before the lump sum is paid

Tax-free component

The tax-free component of a super interest is:

- the contributions segment, plus
- the crystallised segment (fixed at 30 June 2007).

Contributions segment
The contributions segment of a super interest consists of the contributions made after 30 June 2007, to the extent that they have not been and will not be included in the assessable income of the super provider, eg non-concessional contributions.

Other contributions not included in the assessable income of the fund can be found in the two tables in section 5.5 with the exception of excess concessional contributions (which are included in the assessable income of the fund).

Crystallised segment
The crystallised segment of a super interest is a fixed dollar figure. It is the 30 June 2007 value of the following components:

  • concessional
  • post June 1994 Invalidity
  • undeducted contributions
  • CGT exempt, and
  • pre July 1983

Taxable component

The taxable component of a super interest is the value of the super interest, less the tax-free component.

Last modified: Wednesday, July 24, 2019