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Taxation of super benefits

Proportioning - accumulation phase

Section: 7.14

A super interest in the accumulation phase is valued just prior to the benefit payment to obtain the proportions of the lump sum (including a death benefit) or rollover. The percentage of tax- free and taxable components of the super interest is applied to the super benefit being paid.

Example
Just prior to taking a lump sum payment of $10,000, the components of the member's super interest are as follows:

- $60,000 tax free, and
- $40,000 taxable component.

The $100,000 super interest is 60% tax free and 40% taxable. The $10,000 lump sum payment will be 60% tax free and 40% taxable.

Note: If the member is age 60 or over the taxable component will not be assessable income (not subject to tax).

Last modified: Tuesday, May 2, 2017