Turning 60 - what does it mean for super fund members?

What happens to my super interest when I turn 60?

Your super fund will determine the proportion of tax-free and taxable components of your super:

• just before a benefit is paid to you in the case of a lump sum payout, and
• when your super income stream commences, for a super income stream benefit.

The same proportion of tax-free and taxable components will then apply to any benefits, whether lump sum or income stream, that your super fund pays you from then on.

How will my super benefits be taxed when I am aged 60 or over?

If you are paid a super benefit, whether a lump sum or income stream (such as a pension), and this benefit has a taxable component that consists wholly of an taxed element in the fund, the benefit will be tax-free.

If the taxable component of the super benefit contains an untaxed element in the fund (as in certain public sector super funds), the untaxed element of the taxable component of the lump sum will be subject to tax at special rates. The taxable component of an income stream is subject to ordinary rates of tax. However, a tax offset will be available to reduce the tax payable on the benefit.

For further information on untaxed and taxed elements in the fund, please refer to How your super payout is taxed.

Can I still claim a tax offset for a super income stream?

You will be eligible to claim a tax offset equal to 10% of the element untaxed in the fund if:

• you are aged 60 or over
• you receive an income stream benefit, and
• the taxable component of the benefit has an element untaxed in the fund.

Can I still claim a deductible amount (or tax-free component) for an income stream?

You may be eligible to claim a deductible amount – which is now referred to as the tax-free component – if you:

• are aged 60 or over, and
• receive a super income stream benefit which contains an element untaxed in the fund.

Generally, your super fund will calculate the deductible amount for you.

Is there a cap if I take a super lump sum?

You can receive concessional rates of tax up to $1 million (for 2007-2008) on the element untaxed in the fund if you:

• are aged 60 or over, and
• receive a super lump sum that includes or consists of an untaxed element in the fund.

This untaxed plan cap is subject to indexation.

Will I still receive a payment summary?

There will be no tax withheld from the benefit and you will not receive an annual payment summary if you:

• are aged 60 or over throughout the year, and
• receive a super income stream benefit that does not include an untaxed element in the fund.

You will receive an annual payment summary if:

• you are aged 60 or over, and
• your super income stream benefit includes or consists of an untaxed element in the fund.

The payment summary will show the taxed and untaxed elements of the taxable component, the tax-free component and any applicable tax offset amount.

Tax will be withheld and from the taxable component of any benefits you receive before you turn 60 and you will receive payment summaries for those benefits.