Age 60 and over
1. If you retain funds in your superannuation (accumulation) account, any investment earnings and concessional contributions (employer, salary sacrifice and any voluntary contributions claimed as a tax-deduction) will be taxed up to 15%. First Super will automatically deduct the tax payable on superannuation investment earnings and concessional contributions from your account. Any non-concessional contributions will not be taxed. This will be itemised in your annual statement.
2. If you have a Transition to Retirement (TTR) income account, then your TTR drawings are tax free, but the investment earnings will continue to be taxed up to 15%. Any concessional contributions will continue to be taxed at 15%.
3. When you start a First Super Retirement Income account your retirement income payments, lump sum withdrawals and investment returns are all tax free.
Between Preservation Age and age 60
Your super is made up of taxable and tax-free components, depending on how the contributions were made to your super account. When you make a withdrawal, the amount will be proportionately withdrawn from the taxable and non-taxable components of your account balance.
If you make a lump sum withdrawal from your First Super account, then an amount up to ‘Low Rate Cap’ can be withdrawn tax-free. If you start a Retirement Income account, then any money withdrawn will have the taxable component taxed at your marginal tax rate, less 15% offset, with no tax applied to the tax-free component.
Reduce your tax with a re-contribution strategy
There are strategies you can use to reduce the tax payable; or even reduce your retirement taxable component using a re-contribution strategy.
Under Preservation Age
You can usually only access your super before preservation age due to permanent incapacity. In this case you will be taxed the same as those above, under age 60.
Tax on Investment Returns
The money you earn through your First Super Retirement Income account investment option(s) is not taxed. Investment earnings in the retirement stage are all tax-free.
We’re here to help
Anything to do with your super and tax, it’s best to discuss with our financial advice team. There’s no additional cost as it is included in your membership. Book an appointment with a financial planner.