Tax on withdrawals
You may have to pay tax on lump sum withdrawals from super, depending on your age, the amount you withdraw and other factors.
What tax rates are payable on lump sum payments to fund members?
The table below summarises the maximum tax rates payable on lump sum withdrawals from a taxed superannuation fund in 2021/22. Different tax rates apply if the payment is made in the event of death – see further down on this page. Check your latest statement or contact your super fund to confirm the tax components of your super account.
Taxation of lump sum member benefits
When you withdraw a lump sum from super, your payment may be taxed. Usually, if there is tax payable, your super fund will withhold this amount before paying the benefit to you.
There are three different tax components that may make up your super balance. These are:
- Tax-free
- Taxable taxed, and
- Taxable untaxed.
Your age and the amount you withdraw, as well as your fund’s tax components will determine what tax is payable on your lump sum super benefits.
The tax components of super are determined by factors such as the types of contributions that have been made to super for you, the source of contributions, and the earnings that you’ve accrued on your retirement savings.
You can’t request to withdraw your funds from a particular tax component. When you request a withdrawal, the amount you’re paid will reflect the tax components if your super fund in the same proportion. For example, if your super fund is 50% tax-free and 50% taxable component when you request a withdrawal, the lump sum you receive will also be made up of 50% tax-free and 50% taxable component. The table below summarises the maximum tax rates payable when super is paid as a lump sum.
Tax component |
Age | Maximum tax rate |
|---|---|---|
Tax-free |
Any |
Tax-free |
Taxable (taxed element)
|
Under preservation age |
20%1 |
Preservation age to 59 |
Up to $225,000 – 0% Above $225,000 – 15%1 |
|
| Age 60+ | Tax-free | |
Taxable (untaxed element) |
Under preservation age
|
Up to $1,615,000 – 30%1 Above $1,615,000 – 45%1 |
| Preservation age to 59 | Up to $225,000 – 15%1 Between $225,000 and $1,615,000 – 30%1 Above $1,615,000 – 45%1 |
|
| Aged 60+ | Up to $1,615,000 – 15%1 Above $1,615,000 – 45%1 |
1. Plus Medicare levy.
What tax rates are payable on lump sum death benefits?
The table below summarises the maximum tax rates payable when super is paid as a lump sum in the event of a member’s death. If a death benefit is paid as an income stream, the tax rates will be different.
If the super fund pays a lump sum death benefit directly to a beneficiary, tax will be withheld by the super fund. If the super fund pays the death benefit to the legal personal representative of the deceased (ie the executor of the estate) with the amount to be distributed by the estate, the super fund will pay the gross amount, and the appropriate tax will need to be withheld by the estate when paid to beneficiaries.
Taxation of lump sum death benefits
Beneficiary |
Tax component | Maximum tax rate |
|---|---|---|
Dependant for |
Tax-free and taxable |
Tax-free |
| Non-tax dependant for tax purposes | Tax-free |
Tax-free |
Taxable (taxed element) |
15%3 | |
| Taxable (untaxed element4) | 30%3 |
2. Includes a spouse, former spouse, child under 18, child 18 and over and dependant, financial dependant person and interdependent person.
3. Plus Medicare levy, unless paid to deceased’s estate.
4. Broadly, an untaxed element arises where the lump sum death benefit includes a life insurance benefit and the fund has claimed a tax deduction for the insurance premiums.
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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.
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