Withdrawing Your Super Series 5 - Tax on Lump Sums verus Tax on Pension?

I want to withdraw my superannuation. What do I need to consider?

Step 5: Tax on Lump Sums and Pensions

Lump sum payments for most Australians are subject to tax at 16.5% (see table below) for the taxable component paid in excess of $175,000 (2013 year).

Lump Sum Tax Rates (year ending 30th June 2013)

Component of benefit	Age of person at the date the payment is received	Portion subject to PAYG withholding tax	Rate of withholding tax (including Medicare levy)
Tax free component	All ages	n/a	0%
Taxable component (taxed in the Fund)	Aged 60 and over	n/a	0%
	Preservation age to age 59	Amount up to low rate cap of $175,000	0%
		Amount over low rate cap of $175,000	16.5%
	Under preservation age	Whole of taxable component	21.5%

• Tax free component–This will be calculated by your fund, and will include primarily contributions where no deduction was claimed.
• Taxable component– this amount is the balance of your superannuation benefit after deducting the tax free component.

Pension withdrawals are taxed at your marginal rates of tax, but if you are over preservation age (currently 55)you receive a 15% offset for legal withdrawals. It is also important to ensure that a pension is taken within the maximum and minimum limits and at least annually.

 

Pension Tax Rates for age 59 and under (Taxable component only) (year ending 30th June 2013)

 

Age	Tax Rate
Under preservation age	Taxed at your marginal tax rate
Preservation age to age 59	Taxed at your marginal tax rate less 15% pension offset.

(Source: Australian Taxation Office.2012 Aug 31.Key Superannuation Rates and thresholds.<http://www.ato.gov.au/super/content.aspx?menuid=0&doc=/Content/60489.htm&page=6&H6>.Accessed 2013 Jan 14)

 

 

 

 

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