Tax on Super & Pension Accounts

Tax on Super & Pension Accounts


Within your Super/Pension accounts, there may be tax payable on not only your contributions but also on earnings inside your super/pension funds.


Inside super there is a 15% tax payable on any positive earnings. For example if you have a superannuation balance of $200,000 and in the financial year your portfolio has a return of +6% or $12,000, there will be a $1,800 tax liability within your super fund.


The two main types of ‘pension’ funds are Transition to Retirement (TTR) or Account Based Pensions (ABP). The main difference from a tax perspective between the two is that within a TTR account the 15% tax is still payable on earnings inside the fund. Once you start an ABP, this is where the real tax savings start. There is 0% tax payable on earnings inside an ABP.


  • Ensure that if you meet any of the requirements to start an ABP. If appropriate, you are saving the 15% tax payable by being inside an ABP. Please speak with your financial adviser to ensure that your funds are placed in the right structure.


  • If you don’t need to receive the minimum draw down from your pension account then starting an ABP or TTR may not always be the correct option for you. Please speak with your financial adviser.

Case Study:

Paul turned 60 on 15 May 2018 and has recently retired. His super is still in accumulation phase as of today (5/12/2018). Is Paul going to be in a better position if he moves to a TTR or ABP?

As Paul is over 60 and no longer working, he is able to start an ABP which would now see him pay 0% tax on earnings inside the fund. If Paul left his money in super and he received a NET return of $30,000 next financial year, he would have a $4,500 tax liability inside his super. If Paul were to move his funds into an ABP, this $4,500 tax liability for next financial year would then become $0. A saving of $4,500.



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