I would like to clarify tax treatment for a person over 60, who has total super of say $750K. I believe any payments made from an SMSF are free of tax. I think though that any earnings inside the fund are still subject to the 15% earnings tax. And tax on contributions from an employer is still 15%. Is this right?
Answer, Paul Rickard
Thanks for the question.
- a) Yes, provided the recipient is over 60 and the payment is not from an unfunded source (defined benefit scheme), payments are free of tax;
- b) Investment earnings inside the fund (SMSF) are subject to a 15% tax, unless the investments wholly support the payment of a super pension, in which case they are taxed at 0%; and
- c) Concessional contributions, which include the employer’s 9.5%, salary sacrifice contributions and any contributions you claim a tax deduction for, are taxed at 15% at source. If you earn more than $250,000, an additional tax of 15% applies (known as Division 293 tax).
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