How tax applies to your super benefits depends on a number of factors, such as your age and whether your super comes from a taxed or untaxed source. The tax action of both super and death profit is also affected by whether the benefits are paid as a lump sum or income stream
Tax on withdrawing your super
Tax on your super benefits is usually taxed at your marginal tax rate, however this varies depending on several factors, including:
- your preservation age and the age you will be when you get the payment
- whether the money in your super account is taxable or tax-free
- Whether you will get the payment as an income stream or lump sum.
These factors decide whether you:
- pay tax on the withdrawal (for example, whether it is taxable income)
- get tax offsets that decrease the amount of tax that you pay.
Usually, your super benefits will include both a tax-free and a taxable component.
Tax on death benefits
The tax on a death help depends on:
- whether you were a dependant of the deceased
- whether it is paid as a lump sum or income stream
- whether the super is taxable or tax-free and whether the super fund has already paid tax on the taxable component
- Your age and the age of the deceased individual when they died.
If you are a dependant of the deceased, you do not need to pay tax on the taxable component of a death benefit if you receive it as a lump sum. If you receive the benefit as an income stream, different rates of tax apply.
If you are not a dependant of the deceased you can only get the benefit as a lump sum. The taxable component of the payment will be taxed at your marginal tax rate; however this could be reduced by tax offsets.