Superannuation

If your money in super is withdrawn in the form of a lump sum payment prior to age 60, tax may be payable on the benefits.

There are two components within super: the tax free component and the taxable component. The tax payable on any lump sum withdrawal will depend on the proportion of each component within your super fund and your age.

Super lump sum payments must be taken proportionately from the taxable component and tax-free component of your super balance. So if 10% of your super benefit is the tax free component, then any lump sum withdrawal from your fund will have 10% as tax free component and the remaining 90% will be taxable component, whether you withdraw $100 or $100,000. This is known as the ‘proportional rule’

You will pay no tax on your tax-free component, however tax will apply to your taxable component based on your age and the amount being withdrawn.

The table opposite shows how the taxable component is treated for lump sum withdrawals from a taxed superannuation fund.

Please note: From 1 July 2018, eligible prospective first homebuyers will be allowed to withdraw their voluntary superannuation contributions (and, an amount of associated earnings) for the purpose of purchasing or constructing their first home. These voluntary contributions, which must be made within existing superannuation contribution caps, include concessional (i.e. personal deductible contributions and salary sacrificed amounts) and non-concessional contributions. The amount available for withdrawal will be up to $15,000 of voluntary contributions per financial year since 1 July 2017 (up to a total of $30,000 across all years) plus associated earnings, less tax on concessional contributions and associated earnings (e.g. taxed at marginal tax rates, including the Medicare Levy, less a 30% offset).