If super payments from a superannuation fund were made to you or not, it needs to be reported as assessable and therefore taxable income will depend on three key factors:
- Your age
- Your retirement status, if you are under 65 of age
- The portion of your benefit that is subject to a tax that does not contain an untaxed element.
If you are 60 or older:
If you are 60 or older and have retired the benefits you claim from super are not subject to tax provided that the portion that is not tax-free has already been fully taxed. This applies whether you choose to receive your benefits as a lump sum or in the form of a pension or income stream.
If you’re aged 65 or over, you don’t have to have retired to access your super but, again, any benefits that issued from an untaxed source would still be subject to tax.
If you’ve reached preservation age (currently 55 if you were born before July 1960) but are under 60, payments you received from your super fund would be taxed as income at varying rates depending on whether they issued from taxed or untaxed funds.
Most people have their super accounts in fully taxed funds, meaning their benefits would be tax-free if they had retired and/or were of the right age.
Some super funds, however, such as a number of older public sector and government funds, did not pay the contributions and earnings tax from concessional contributions. Benefits received from these untaxed funds are accordingly subject to higher tax rates than those paid by the vast majority of large super funds. If your super was largely composed of funds from such untaxed sources it is very likely that you’d end up owing tax even while you met the age and retirement stipulations.