Tax on pensions

 

Super can be a tax-effective way of saving for and receiving an income in retirement, compared to other types of non-super investments, but there are some key considerations to keep in mind.

The Australian tax system can be complex, and there can be significant tax implications associated with super. It’s always a good idea to get professional advice when making any decisions about your financial future.

As a general guide, here’s a summary of how tax works with a super pension (please remember this isn’t a comprehensive tax guide):

  • Pension payments are tax-free after age 60: Any super benefits (pension or lump sum) that are paid to you after age 60 are tax-free.
  • If you’re under 60, tax generally depends on your age: If you receive pension payments under age 60, the taxable component of your pension is subject to Pay As You Go (PAYG) Withholding tax. This means we must withhold tax from your pension payments and send it to the ATO. (Note: Different tax rules apply to lump sum withdrawals.)
  • Superannuation pension tax offset: If you’re between your preservation age and age 59, or if your pension is a disability or death benefit pension, a tax offset of 15% of your assessable pension income applies.
  • Tax-free investment returns: All investment returns applied to a Retirement Access pension account (which may be positive or negative) are tax-free.

 

For more details on tax and super, refer to your Member Guide (PDS) or Member Booklet.

 

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Getting the right advice is important

When you take these choices and factors into account, together with the potential tax implications and possible effects on Age Pension or other government entitlements, it’s essential to get the right advice before finalising any decisions. There are different advice options available to you as a member.

Find out more

Other useful resources

    Five tips to help you prepare for tax time

    There's a lot to think about at tax time - this article provides some timely reminders and tips to help you make the process as easy and effective as possible. (Source: CommBank Blog)