Super can be an excellent way to save for your retirement, because it attracts special Government benefits and tax concessions. That makes super one of the most tax-effective investment vehicles.To work out how your super payout will be taxed on retiring, you need to know:

• the part of your payout that is taxable – the taxable component
• the age you’ll be when you receive the payout
• how your payout is paid – as a lump sum, pension or a combination of both.

Super paid from a taxed source (like Health Super) as a lump sum or pension is generally tax free when paid to people aged 60 or over.

If you take your super as a pension, then any investment returns on the assets that support the pension are also tax free. This can assist in making your super savings last longer.

Super is taxed at a flat rate of 15% at three points: on contributions (entry into super), on investment returns (whilst in super) and on payment of benefits (exit from super).

1. Tax on contributions

Tax and limits on contributions

The government has set limits on the amount you can contribute to your super each year at a reduced tax rate. If your contributions exceed this limit, you may have to pay extra tax on the excess contributions.

2. Tax on investment returns

While your super is in the Fund, Health Super must pay tax on investment returns. The current rate of tax is 15% per year (but it may be less after rebates and credits are taken into account).

Health Super manages all the tax requirements relating to super contributions and super investment earnings. Any taxes are taken into account when investing super contributions and reporting investment returns to members.

3. Tax on benefits (other than death benefits)

The tax treatment of benefits paid as a lump sum (from a taxed source) is summarised in the following table:

As well as your age, the tax on your super benefit can also depend on:

• if you choose to receive your benefit as a lump sum or as a pension
• if your benefit is received for retirement, death or disability
• whether your benefit is paid to yourself, one of your dependents or non-dependents
• whether or not you joined Health Super prior to 1983
• whether the Fund holds your Tax File Number.

For more information on tax and super visit the ATO website.

Tax on money rolled into or out of a super fund

There is no tax payable when you roll over money from one Australian super fund to another unless the amount rolled over contains an untaxed element e.g. a payment from certain public sector super funds for Government employees.

Need help?

Health Super Financial Planning can provide you with access to a qualified financial planner at a reduced rate. If you need help with your retirement planning and to consider your retirement years call Health Super Financial Planning on 1300 780 223.

Health Super Financial Services Pty Ltd (trading as Health Super Financial Planning) ABN 37 096 452 318, AFSL No. 240019 is a wholly owned subsidiary of Health Super Pty Ltd (the Trustee of Health Super). Health Super Pty Ltd pays Health Super Financial Planning (HSFP) half of the annual 1% account keeping fee charged for Health Super’s Pension products. Health Super Pty Ltd also pays a variable monthly amount to HSFP to conduct member seminars. Health Super is not a representative of HSFP and receives no commission when making a referral to this service.