Tax on Contributions

Contributions may be taxed at a rate of 15%. No tax will be deducted from contributions where a tax deduction is not claimed (undeducted contributions) or from contributions made on behalf of an eligible spouse.

Eligible Spouse Contributions

A spouse can obtain an income tax rebate of up to $540 per annum for superannuation contributions made on behalf of a low income or non-working eligible spouse. The rebate is calculated as 18% of contributions up to a maximum contribution of $3,000. The $3,000 limit reduces by $1 for every $1 that the spouse's assessable income plus reportable fringe benefits exceeds $10,800. Thus the rebate phases out when the spouse's income plus reportable fringe benefits is $13,800 or more. Although there is a limit upon the rebate available, there is no limit on the amount of the contribution which may be made for an eligible spouse.

Tax on account transfers

When you transfer money from one superannuation fund to another, there is no tax unless the amount transferred contains an untaxed component (eg a termination payment from an employer). An untaxed component will be taxed the 15% contribution tax mentioned above.

Tax on Investment Earnings

Complying Superannuation Fund's investment earnings are taxed at a maximum rate of 15%.

Tax on withdrawals

Tax may be payable when you receive a lump sum ETP from the Fund. The amount of tax payable is dependent on the components included in your ETP and your age at the date of payment.

The lump sum tax rates applicable to the various components of an ETP are set out in the table below.

Lump Sum Tax Rates

Income component derived by the payee in the income year	Age of person at the date the payment is received	Component subject to PAYG withholding	Rate of withholding (incl. Medicare levy)
Member benefit – taxable component – element taxed in the fund	Below preservation age	Whole amount	21.5%
	Preservation age to age 59	Amount up to low rate cap1	Nil
		Amount above the low rate cap1	16.5%
	Aged 60 and above	Whole amount	Nil
Member benefit – taxable component – element untaxed in the fund	Below preservation age	Amount up to untaxed plan cap2	31.5%
		Amount above untaxed plan cap2	46.5%
	Preservation age to age 59	Amount up to low rate cap1	16.5%
		Amount above the low rate cap1 up to the untaxed plan cap2	31.5%
		Amount above untaxed plan cap2	46.5%
	Aged 60 and above	Amount up to untaxed plan cap2	16.5%
	Amount above untaxed plan cap2		46.5%
Lump sum death benefit paid to non-dependants4 – taxable component – element taxed in the fund	Any	Whole amount	16.5%
Lump sum death benefit paid to non-dependants4 – taxable component – element untaxed in the fund	Any	Whole amount	31.5%
Lump sum death benefit paid to dependants3 – taxable component – elements taxed and untaxed in the fund	Any	None	Nil
Rollover superannuation benefits – taxable component – element taxed in the fund	Any	Whole amount	Nil
Rollover superannuation benefits – taxable component – element untaxed in the fund	Any	Amount up to untaxed plan cap2	Nil
		Amount above untaxed plan cap2	46.5%
Superannuation lump sum benefits less than $200	Any	None5	Nil
Superannuation lump sum benefit (terminally ill recipient)	Any	None	Nil

1. For the 2009–10 income year, the low rate cap is $150,000 and is indexed annually. The low rate cap in relation to superannuation lump sums paid to an individual who has reached their preservation age is the maximum amount of the taxable component that is given the lowest rate of tax. The low rate cap is a lifetime limit. That is, if a payee received an element taxed in the fund and an element untaxed in the fund in a lump sum, the total low rate cap allowed for that lump sum cannot exceed the low rate cap that applies. The low rate cap is allocated to the element taxed in the fund first before allocating the remaining low rate cap to the element untaxed in the fund.
2. For the 2009–10 income year, the untaxed plan cap is $1,100,000 and is indexed annually.
3. If the lump sum death benefits are being paid to an individual who was a dependant of the deceased, do not withhold amounts from that payment. A dependent includes both child and spouse of the deceased. Child of the deceased includes all of the following:
   • an adopted child, stepchild or ex-nuptial child
   • a child of the deceased's spouse
   • someone who is a child of the deceased within the meaning of the Family Law Act 1975 (for example, a child who is considered to be a child of a person under a state or territory court order giving effect to a surrogacy agreement).
   Spouse of the deceased includes all of the following:
   • another person (whether the same sex or opposite sex):
     • with whom the deceased was in a relationship that was registered under a law of a prescribed state or territory law
     • who lived with the deceased on a genuine domestic basis in a relationship as a couple
   A dependent includes any person with whom the deceased had an interdependency relationship. An interdependency relationship includes a close personal relationship between two people who live together, where one or both provides for the financial and domestic support and personal care of the other.
   A dependent can also be a person who was a dependent of the deceased just before the latter died. Before accepting that a person is financially dependent, phone 13 10 20 for more information. If the ETP is to be paid to the trustee of a deceased estate, an amount should not be withheld.
4. As a result of an amendment to the Income Tax Assessment Act 1997, an individual is treated as a death benefits dependant of a deceased person if the deceased died in the line of duty as a member of the defence force, a member of the Australian Federal Police or the police force of a state or territory, or a protective service officer (as defined in the Australian Federal Police Act 1979).
5. There is no withholding required from the whole amount if it is paid by a regulated superannuation fund, complying approved deposit fund or retirement savings account provider as a superannuation lump sum and it is the payee’s entire benefit.