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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)



of benefit

Age of person at
the date the
payment is

Portion subject to PAYG withholding


Rate of
withholding tax
Medicare levy)

Tax free component

All ages



Taxable component
(taxed in

the Fund)

Aged 60 and over



Preservation age to age 59

Amount up to low rate cap of $175,000


Amount over low rate cap of $175,000




Whole of taxable component


  • 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)



Tax Rate

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.<>.Accessed 2013 Jan 14)





General Advice Warning: Liability limited by a scheme approved under Professional Standards Legislation.This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal taxation and financial advice prior to acting on this information. Opinions constitute our judgments at the time of issue and are subject to change. Neither, the Company or any of employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document.

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