11.1 Taxation of superannuation funds

How is the super fund taxed?

Superannuation is taxed at concessional levels compared to other types of investments. For most members aged 60 and over, a super fund is effectively tax-free.

Super funds must be complying (as defined by APRA) to be taxed at 15%.

Tax file number (TFN)

A fund must pay tax at the rate of 47% on no-TFN contributions income - that is contributions paid to the fund where a TFN has not been provided.

Tax on a non-complying fund

If a fund receives a notice from APRA stating that it is a non-complying fund, it is taxed at the rate of 45% . and denied the following concessions:

• certain special CGT rules,
• death and disablement insurance deductions
• exemption of income related pensions deductions
• ability to transfer contributions tax liability
• refund of excess franking credits

This technical resource is intended for the use of financial advisers only. It is current as at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.

11.2 Super lump tax (member benefits)

The table below outlines the taxation treatment of taxed and untaxed amounts paid from a superannuation fund:

Taxed in the fund:

The low rate cap amount is the limit set on the amount of taxable components (taxed and untaxed elements) of a super lump sum that can receive a lower (or nil) rate of tax. It applies to members that have reached their preservation age but are below 60 years.

It is a lifetime cap which is reduced by any amount previously applied to the low rate threshold.

Year	Low-rate cap
2024/25	$245,000
2023/24	$235,000

The untaxed plan cap amount:

• limits the concessional tax treatment of benefits that have not been subject to contributions tax in a super fund
• applies to each super plan from which a person receives super lump sum member benefits
• is used to calculate the excess untaxed roll-over amount.

Year	Untaxed plan cap
2024/25	$1,780,000
2023/24	$1,705,000

Age	Lump sum	Income stream
Age 60 and over	Tax-free (NANE)	Tax-free (NANE)*
Preservation age to age 59	0% up to the low rate cap  15% above the low rate cap up to the untaxed plan cap	Marginal tax rates and tax offset of 15% of the taxable component
Below preservation age	Subject to tax up to the maximum rate of 20% plus Medicare	Marginal tax rates (no tax offset)

*(NANE) non-assessable non-exempt

Untaxed in the fund:

Age	Lump sum	Income stream
Age 60 and over	Subject to tax up to a maximum of 15% on the amount up to the untaxed plan cap.	Marginal tax rates and tax offset of 10% of element untaxed in the fund.
Preservation age to age 59	Subject to tax up to a maximum of 15% plus Medicare levy on amounts up to the low-rate cap. Amount exceeding the low-rate cap and up to the untaxed plan cap amount is taxed at the maximum rate of 30% plus Medicare. Taxed at the top marginal tax rate above the untaxed plan cap amount.	Marginal tax rates and no tax offset
Below preservation age	Amount up to the untaxed plan cap is taxed at a maximum rate of 30% plus Medicare. Amount exceeding the untaxed plan cap amount is taxed at the top marginal tax rate.	Marginal tax rates and no tax offset

Source:

This technical resource is intended for the use of financial advisers only. It is current as at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.

11.4 Death benefit payments

Death benefit payments to non-dependants:

Age of deceased	Type of death benefit	Age of recipient	Taxation treatment
Any age	Lump-sum	Any age	Amount taxed in the fund taxed up to a maximum rate of 15%. Element untaxed in the fund is taxed at 30%
Any age	Income stream	Any age	Cannot be paid as an income stream. Income streams that commenced before 1 July 2007 are taxed as if received by a dependant.

Death benefit payments to dependants:

Age of deceased	Type of death benefit	Age of recipient	Taxation treatment
Any age	Lump-sum	Any age	Tax-free (not assessable, not exempt income)
Aged 60 and over	Income stream	Any age	Element taxed in the fund is tax-free. Element untaxed in the fund is taxed at marginal rates with an offset of 10% of the element untaxed in the fund.
Below age 60	Income stream	Above age 60	Element taxed in the fund is tax-free. Element untaxed in the fund is taxed at marginal rates with an offset of 10% of the element untaxed in the fund.
Below age 60	Income stream	Below age 60	Element taxed in the fund is taxed at marginal rates with an offset equal to 15% of the amount. Element untaxed in the fund is taxed at marginal rates.

This technical resource is intended for the use of financial advisers only. It is current as at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.