Taxation of Superannuation Benefits
Three-stage taxation
Superannuation is taxed at three points: contributions (15% concessional, 30% under Div 293), fund earnings (15% in accumulation, exempt in retirement phase), and benefits. Benefit taxation depends on the taxable vs tax-free component and the member's age and preservation status.
Benefit taxation rules
For members aged 60+, benefits from a taxed source are tax-free. For members aged 55–59, taxable components are taxed at marginal rates with a 15% offset. Lump sums and pensions are treated differently. The tax-free component is always tax-free. Death benefits paid to dependants are tax-free; to non-dependants, the taxable component is taxed (commonly 15% for lump sums, 30% for untaxed sources).
Traps
Questions often blur the source (taxed vs untaxed fund) and the recipient (member vs dependant vs non-dependant). The low-rate cap and the 15%/30% death benefit rates are frequent distractors. Also watch the difference between the tax-free and taxable components when a pension is commuted.
Worked example
A 62-year-old receives a $200,000 lump sum from a taxed fund with a $50,000 tax-free component. The full benefit is tax-free because she is over 60 and the fund is taxed. If she were 58, the $150,000 taxable component would be taxed at marginal rates with a 15% offset.