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Tax on super pensions

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Tax may be payable on investment earnings and income payments if you have money in a superannuation pension.

What tax rate is payable on investment earnings?

The table below summarises the tax rate payable on investment earnings in the fund from the two main types of pensions that can be started with super money. The tax payable on income payments received from a super pension is shown lower down on this page.

 

Tax payable on investment earnings

Pension type

Tax on investment earnings

Transition to retirement pension1

Up to 15%2

Account based pension

0%2

1. Where the transition to retirement (TTR) pension is held in pre-retirement phase. When a TTR pension enters retirement phase Nil tax is payable on investment earnings in the fund.

2. Assumes pension is started from a taxed super fund.

What tax rates are payable on pension payments if you start a superannuation pension?

The table below summarises the tax payable on income payments if you use your super to start a transition to retirement or account based pension. Check your latest statement or contact your super fund to confirm the tax components of your super account.

Note: Different tax rates apply to ‘capped defined benefit income streams’ – see the Australian Taxation Office (ATO) for more information.

 

Taxation of pension payments received as a fund member

Tax component

Age Maximum tax rate

Tax-free

Tax-free and taxable

Tax-free

Taxable

(taxed element)

Under preservation age

Taxed at marginal tax rate3

Preservation age to 59 or paid due to permanent disability

Tax at marginal tax rate3 less 15% tax offset
Age 60+ Tax-free

3. Plus Medicare levy.

What tax rates are payable on pension payments if you receive a death benefit pension?

The table below summarises the tax payable on income payments from a transition to retirement pension or an account based pension you may receive in the event of the death of another person.

Note: Different tax rates apply to ‘capped defined benefit income streams’ – see the Australian Taxation Office (ATO) for more information.

 

Taxation of pension payments received in the event of the death of a fund member

Age of deceased/beneficiary4 Tax component Tax treatment

Either aged 60 or over

Tax-free

Tax-free
Taxable (taxed element) Tax-free
 Both under age 60

Tax-free

Tax-free
Taxable (taxed element) Taxed at a marginal tax rateless 15% offset6

4. This tax treatment also applies to child superannuation income streams paid due to death. Income stream payments are taxed at adult marginal tax rates (if applicable).

5. Plus Medicare levy.

6. Income will be tax‑free once beneficiary reaches age 60.

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What next?

Find out more about Super and retirement rules.

 

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General advice and information only

Any advice and information on this website is general only, and has been prepared without taking into account your particular circumstances and needs. Before acting on any advice on this website you should assess or seek advice on whether it is appropriate for your needs, financial situation and investment objectives.

Tax disclaimer

Any general tax information on this website is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.