Tax on Pensions

Tax applying to pensions

Taxation rules that apply to super can be complicated. The following information is an overview of the tax treatment of pensions. You should seek professional taxation advice to understand the impact of tax upon your pension.

For more information visit the ATO website at www.ato.gov.au/individuals or call the ATO Call Centre - Superannuation Enquiries on 13 10 20.

Transaction type	Tax applicable
Transfer in from another super fund¹	Nil
Investment earnings	Nil Pensions are exempt from paying income tax on investment earnings
Pension income payments	If aged 60 or over - Nil If aged between 55-59 - the taxable component will be taxed at your marginal tax rate: however, a 15% tax offset will apply
Lump sum withdrawals	Standard rules apply - see below

¹Excluding any untaxed elements

Tax applying to lump sum withdrawals

You may have to pay tax when you withdraw money from NSF Super (including lump sum withdrawals from a pension). The amount of tax will depend on your circumstances, including your age.

Age	Tax payable on lump sum withdrawals
	Tax-free component		Taxable component
Under 55	Not subject to tax		20% plus Medicare Levy
55²-59	Not subject to tax		First $165,000¹ - 0% Balance over $165,000 - 15% plus Medicare Levy
60 and over	Not subject to tax		Not subject to tax

¹This is the amount for the 2011/12 financial year and is indexed annually.
²For those born from 1 July 1960, age 55 is replaced with your relevant preservation age.

Lump sum withdrawals on the grounds of total and permanent disability (TPD) or terminal illness are taxed differently. Please contact NSF Super for more information.

Tax components

Your pension benefit is made up of two different tax components. The tax-free and taxable components are generally made up of the following contribution types:

Tax-free Component	Taxable Component
Non-concessional contributions (i.e.after-tax, personal)	Concessional contributions (e.g.employer and salary sacrifice contributions)

When pension payment or lump sum withdrawals are paid to you, you are not able to specify the proportion in which the taxation components are paid out, i.e. all taxation components will be paid out in proportion to the taxable and exempt components of the benefit.