Tax-free twice

When you reach 60 and start a retirement income stream you get two dollops of tax-free super.

If you’re aged 60 years or over, any lump sum or income stream benefits you receive from a taxed super fund (90% of all super benefits) are tax-free. Further, fund earnings on assets in pension phase are exempt from tax – taking an income stream means no tax on fund earnings.

In contrast, earnings on assets in accumulation phase are subject to up to 15% earnings tax. If you choose not to draw a pension from your fund and leave your super benefit in accumulation phase indefinitely, then the 15% earning tax applies.

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Copyright Trish Power

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