If you are aged 60 or over and decide to take a lump sum, for most people all your lump sum benefits are tax free. If you are aged 60 or over and decide to take a super pension, all your pension payments are tax free unless you are a member of a small number of defined benefit super funds.
A super income stream is when you withdraw your money as small regular payments over a long period of time. If you're aged 60 or over, this income is usually tax-free.
If you are aged between 60 and 64 your Super Benefit is preserved until your "Retirement". There are absolutely no restrictions to accessing your Super Benefit when aged between 60 and 64 after you are "Retired". In this case your Super Benefit can be accessed as either a Pension or Lump Sum withdrawal.
There are two ways you can access your super at age 60 and still work; either by using your super to start a transition to retirement pension, or by meeting the superannuation definition of retirement.
For most people, an income stream from superannuation will be tax-free from age 60.
If you are aged 60 or over and decide to take a lump sum, for most people all your lump sum benefits are tax free. If you are aged 60 or over and decide to take a super pension, all your pension payments are tax free unless you are a member of a small number of defined benefit super funds.
There are absolutely no restrictions to accessing your Super Benefit when aged between 60 and 64 after you are retired. There are two ways you can access your Super; either as a lump-sum payment or as a pension.
There are no special tax rates for a super withdrawal because of severe financial hardship. It is paid and taxed as a normal super lump sum. If you are under 60 years old, this is generally taxed between 17% and 22%. If you are older than 60 years old, you will not be taxed.
Any assets you 'gift' that exceed $10,000 per financial year, limited to $30,000 over a rolling 5-year period, will still count towards the assets test. Any super you have will be counted as an asset, including the balance of any account-based pensions such as your NGS Income account.
You may be able to take your superannuation as a lump sum payment when you retire. This is usually tax-free from age 60.
The taxable component of a super income stream is assessable income for the recipient and is subject to withholding tax.
Your super investment earnings are generally taxed at 15% while you're working. Taxes get deducted from investment earnings with any applicable fees† .
Accessing your Super Benefit when aged over 65
Once you reach age 65, you can access your Super Benefit at any time whether you have retired or not. There are absolutely no restrictions to accessing your Super Benefit when over 65. Your Super Benefit can be accessed as either a Pension or Lump Sum withdrawal.
Pre-planning helps
A good place to start is the ASFA Retirement Standard, March quarter 2022. ASFA estimates people who want a comfortable retirement need $640,000 for a couple, and $545,000 for a single person when they leave work, assuming they also receive a partial age pension from the federal government.
The super can be used to make payments to your home loan or to pay council rate arrears. Any super you withdraw for this purpose will be taxed and the tax amount will be deducted from the lump sum.
If you withdraw a super lump sum, the lump sum does not count as income for the income test, but what you do with those funds can affect your Age Pension. These funds could potentially be included in your asset and income tests.
Under the "Proportioning Rule" and where the Member is aged between preservation age and 59, the "Tax Free" Component of the Lump Sum withdrawal is tax free. The "Taxable" Component of the Lump Sum withdrawal is taxed as follows: The amount up to the low rate cap amount is tax free.
If your fund is paying you a superannuation pension, it is assessable as an income stream.
WILL ACCESSING MY SUPER AFFECT MY CENTRELINK PAYMENT? If you withdraw money from your super fund, you must tell Centrelink within 14 days. Money withdrawn from super is not treated as income for a person receiving a social security payment.