Tax on super in retirement

Once you turn 60 your super is tax free. Before this age, super is generally taxed at much lower rates than many other types of investments.

Lump sum withdrawals

Any lump sum you withdraw from LGIAsuper is usually made up of two components:

  • Tax-free component (generally includes your after-tax contributions)
  • Taxable component

The Australian Government requires payments to be proportional so you can’t select which component you want your withdrawal to come from. For more information see the table below or download our Superannuation tax info sheet.

Age Tax on taxable component
Under preservation age Taxed at 22% including Medicare levy
Between preservation age and age 60 First $195,000* tax free then taxed at 17% including Medicare levy
Age 60 plus Tax free

*2016/17 threshold

Pension income payments

If you have reached your preservation age but are under 60 your pension payments may be included as assessable income for tax purposes. But there are advantages that apply to super pension income that don’t apply to salary (such as a tax-free component, 15% tax offset and tax-free investment earnings).

What may be taxed Tax rate How it's paid
When transferring to/from a super pension
Account balance 0% Not applicable
While invested in a super pension
Investment earnings 0% Not applicable
When paid to you as income from a super pension (ie. pension payment)
Taxable component of your benefit:
Age 60 plus

Between preservation age and age 60
Tax free

PAYG with a tax offset of 15%
Not applicable

Deducted by the fund*
When paid to you as a lump sum withdrawal
Taxable component of your benefit:
Age 60 plus

Between preservation age and age 60
Tax free

PAYG with a tax offset of 15%
Not applicable

Deducted by the fund*

* Some tax will be deducted by the fund but the Australian Tax Office may charge additional tax when you complete your tax return.

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