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Taxation of super benefits

Taxation of super income stream benefits

Section: 7.8

Age Taxable component (taxed element) Taxable component (untaxed element)
60 and above Non-assessable non-exempt income (NANE) Marginal tax rate less 10% tax offset
Preservation age to 59 Marginal tax rate less 15% tax offset Marginal tax rate (no tax offset)
Below preservation age Marginal tax rate (no tax offset) Marginal tax rate (no tax offset)

Note: For all non-zero tax rates, Medicare levy may also apply.

Additional taxation may apply to income over $100,000 paid from a capped defined benefit income stream from 1 July 2017. See section 13.3 for more information on the taxation of pension/annuity payments from capped defined benefit income streams.

15% tax offset

A 15% non-refundable offset applies where:

  • the taxable component (taxed element) forms part of the recipient's assessable income, and
  • the recipient is aged preservation age to age 59, or
  • the income stream is a death benefit, or
  • the income stream is a disability super benefit.
Calculating 15% tax offset

Tax offset = 15% x taxable component (taxed element)

Taxation of commutations from a superannuation income stream

Full commutations from a superannuation income stream are a lump sum superannuation benefit for tax purposes.

From 1 July 2017, partial commutations from a superannuation income stream are also a lump sum superannuation benefit for tax purposes and do not count towards the minimum annual payment requirement.

Prior to this date, partial commutations from eligible income streams were taxed as income stream benefits unless the member had made an election to treat the commutation as a superannuation lump sum.

For the tax treatment of superannuation lump sums, refer to

  • where paid to the pensioner and where the income stream is not a death benefit income stream
  • where paid to the pensioner and where the income stream is a death benefit income stream
  • where rolled over.

Last modified: Friday, January 12, 2018