LUMP SUM
TAX
Fact Sheet
This fact sheet will help you to better understand how your super is taxed and explain
the terminology that is used in relation to this complex issue.
Untaxed super funds
The Lump Sum Scheme is an untaxed fund, which means that the Commonwealth
Government does not tax either the contributions your employer makes on your behalf
or your investment earnings, until you leave the Scheme.
Rather than paying tax up front, tax is charged when an entitlement is paid, in
accordance with the Australian Taxation Office rules for untaxed funds. Most super
funds are taxed funds except for a few public sector funds, such as the Lump Sum
Scheme.
Tax on your super lump sum
When you receive your lump sum entitlement from the Scheme it is subject to tax.
The Lump Sum Scheme is an
untaxed fund, which means that
the Commonwealth Government
does not tax either the
contributions your employer makes
on your behalf or your investment
earnings, until you leave the
Scheme.
You can either take your super lump sum in cash or roll it over into another fund,
depending on the preserved and unpreserved portions of your entitlement.
Explanations on preserved and unpreserved portions can be obtained by referring to
the Lump Sum Scheme “Entitlements” fact sheet on the Super SA website.
There are a number of tax components, or parts, that make up your entitlement when
it is paid.
Table 1: Names of common tax components of your entitlement
Names of tax components
Tax free component
Taxable (untaxed) component
Taxable (taxed) component
How your super will be taxed if cashed
This depends on whether you have rolled super in from a taxed super fund.
LSFS21
Situation 1
If you have not rolled funds into the Scheme from a taxed fund, the “taxable (untaxed)
component”, will be taxed as shown on the following page in Table 2.
Telephone (08) 8207 2094 (for calls from within
the State Government Network)
or 1300 369 315
Fax (08) 8115 1296
Website www.supersa.sa.gov.au
Email supersa@sa.gov.au
Last updated
July 2015
Page 1 of 4
Table 2: How tax is calculated on your Lump Sum Scheme entitlement
(excluding any rollovers) from 1 July 2015
Your Age
Tax on taxable (untaxed) component
Under Commonwealth 30% maximum tax rate up to $1,395,000
preservation age
Commonwealth
preservation age
up to age 59
15% tax up to $195,000
30% tax on balance up to $1,395,000
60 or over
15% tax on amounts up to $1,395,000
If you roll over your super
entitlement to a taxed fund 15%
contributions tax will be deducted
from the part of the entitlement
called the “taxable (untaxed)
component”.
Please note:
– The 2% Medicare levy is also deducted when tax is payable and you take your Lump Sum
Scheme entitlement in cash.
– Taxable (untaxed) amounts over $1,395,000 will be taxed at the highest marginal rate and
2% Temporary Budget Relief Levy.
Situation 2
If you have rolled funds into the Scheme from a taxed fund, the tax on the “taxable
(taxed) component” of the rollover amount received is calculated differently to your
Lump Sum Scheme entitlement. Tax will be applied as for taxed super funds. See
Table 3.
Table 3: How tax is calculated for any rollovers from 1 July 2015
Age
Tax on taxable (taxed) component
Under Commonwealth 20% maximum rate (no limit)
preservation age
Commonwealth
preservation age
up to age 59
Taxed at 0% up to $195,000
15% tax on balance (no limit)
60 or over
Tax free
Please note:
– The 2% Medicare levy is also deducted when you take your Lump Sum Scheme entitlement in
cash and tax is payable.
Table 4: Commonwealth Government preservation age table
Date of birth:
Commonwealth Government preservation age:
Before 30 June 1960
55
1 July 1960 to 30 June 1961
56
1 July 1961 to 30 June 1962
57
1 July 1962 to 30 June 1963
58
1 July 1963 to 30 June 1964
59
After 1 July 1964
60
Please note:
– Commonwealth Government preservation rules are different from preservation rules in Super SA
schemes. You need to be aware of this if you are rolling money out of a Super SA scheme and into
the Super SA Flexible Rollover Product.
Telephone (08) 8207 2094 (for calls from within
the State Government Network)
or 1300 369 315
Fax (08) 8115 1296
Website www.supersa.sa.gov.au
Email supersa@sa.gov.au
Last updated
July 2015
Page 2 of 4
How your super will be taxed if rolled over to another fund
If you roll over your entitlement to the Super SA Flexible Rollover Product or another
taxed superannuation fund, 15% contributions tax will be deducted from the part of the
entitlement called the “taxable (untaxed) component”. The “taxable (untaxed) component”
is the majority entitlement accrued in the Lump Sum Scheme, excluding a “tax free
component” (after-tax member contributions).
NOTE: The Medicare levy is not payable in addition to the contributions tax when your
Lump Sum Scheme entitlement is rolled over to a taxed superannuation fund. If your
“taxable (untaxed) component” is over $1,395,000 the excess will be taxed at the highest
marginal rate and 2% Temporary Budget Relief Levy before your entitlement is rolled over.
If you have super invested in the Triple S or Pension schemes, a separate cap of
$1,395,000 applies for each scheme. You should therefore seek professional financial
advice should you wish to consolidate super held in other untaxed schemes into the Lump
Sum Scheme, or vice versa.
It is important that you provide your
Tax File Number (TFN) to Super SA.
If you do not, your entitlement may
be taxed at the highest marginal
rate.
Proportioning of entitlements
Any entitlement taken in cash or rolled over to another fund must have the tax
components calculated in the same proportions as the components that make up your
total entitlement. You are unable to select only your tax-free member after-tax
contributions. This means that payments in cash or rollovers to another fund will
contain taxable amounts and you may need to pay tax on these.
The information outlined above is based on an interpretation of current laws. These laws
may change at any time. It is recommended that you speak to a financial adviser
regarding how they may apply in your particular circumstances.
Tax file numbers
Your Tax File Number (TFN) is a unique number issued to you, as a taxpayer, by the Tax
Office. It enables the Tax Office to match information it receives about income earned
with details disclosed in your tax return.
Providing your super fund with your TFN will have the following benefits:
– your super fund will be able to accept all types of contributions to your account(s)
– other than the tax that may ordinarily apply, no additional tax will be deducted when
you receive your super entitlement
– it will make it much easier to trace different accounts in your name so that you receive
all your super when you retire
– your super fund will be able to accept payment of your Government Co-Contribution to
your account.
Your TFN will only be used for lawful purposes. These purposes may change in the future
as a result of legislative change. The Super SA Board may disclose your TFN to another
super fund when your entitlements are being transferred, unless you notify the Super SA
Board in writing that your TFN may not be disclosed to any other trustee.
Super SA can tell you if we already have your TFN or you can check your Annual
Statement. To provide Super SA with your TFN, complete a “Tax File Number Notification”
form, available on the Super SA website. Alternatively, you can provide Super SA with
your TFN through the secure member area of the Super SA website. You will need your
Super ID to log in.
Division 293 tax for high income earners
If the sum of your income and relevant concessionally taxed contributions is over
$300,000 per year, you’ll be taxed at 15% of your relevant concessional contributions
above the $300,000 threshold. If you are liable for the tax you’ll receive notification from
the Australian Tax Office (ATO) advising you of the amount payable and your payment
options. The ATO will issue a Division 293 tax amendment that may be made up of:
Telephone (08) 8207 2094 (for calls from within
the State Government Network)
or 1300 369 315
Fax (08) 8115 1296
Website www.supersa.sa.gov.au
Email supersa@sa.gov.au
Last updated
July 2015
Page 3 of 4
– a due and payable amount in respect of accumulation interests
– a deferred payment in respect of defined benefit interests.
For further information about the Division 293 tax, please refer to the “Division 293 Tax”
fact sheet on the Super SA website or the ATO website.
Superannuation Surcharge
Surchargeable contributions are your salary sacrifice contributions and the total notional
contributions payable into your Scheme by your employer. A tax, called the
Superannuation Surcharge, was imposed by the Commonwealth Government on your
surchargeable contributions once your Adjusted Taxable Income reached certain levels.
The tax was introduced on 20 August 1996 and levied until 30 June 2005.
Any surcharge liability accrued prior to 1 July 2005 will be payable upon leaving the Lump
Sum Scheme, however members can elect to use a portion of their super entitlement to
pay any outstanding surcharge liability rather than paying this with
after-tax money.
More detailed information on the surcharge can be found on the Lump Sum “Surcharge”
fact sheet, available from the Super SA website.
Further information
The following fact sheets and Product Disclosure Statements (PDS) may be of particular
assistance if read in conjunction with the information presented here:
– Government Co-Contributions
– Retirement
– Surcharge Payment Options
– Super SA Flexible Rollover Product PDS
– Super SA Income Stream PDS
Disclaimer
The information in this document is intended to help you
understand your entitlements in the Lump Sum Scheme.
Super SA does its best to make sure the information is
accurate and up to date. However, you need to be aware
that it may not include all the technical details relevant to
the topic. For the complete rules of the Lump Sum Scheme,
please refer to the Superannuation Act 1988. The Act and
accompanying Regulations set out the rules under which
the Lump Sum Scheme is administered and entitlements are
paid. You can access a copy from the Super SA website.
The Lump Sum Scheme is an exempt public sector
superannuation scheme and is not regulated by the
Australian Securities and Investments Commission (ASIC) or
the Australian Prudential Regulation Authority (APRA).
Super SA is not required to hold an Australian Financial
Services Licence to provide general advice about the Lump
Sum Scheme.
The information in this document is of a general nature only
and has been prepared without taking into account your
objectives, financial situation or needs. Super SA
recommends that before making any decisions about the
Lump Sum Scheme you consider the appropriateness of this
information in the context of your own objectives, financial
situation and needs, read the Product Disclosure Statement
(PDS) and seek financial advice from a licensed financial
adviser in relation to your financial position and
requirements.
Super SA and the State Government disclaim all liability for
all claims, losses, damages, costs or expenses whatsoever
(including consequential or incidental loss or damage),
which arise as a result of or in connection with any use of,
or reliance upon, any information in this document.
Telephone (08) 8207 2094 (for calls from within
the State Government Network)
or 1300 369 315
Fax (08) 8115 1296
Website www.supersa.sa.gov.au
Email supersa@sa.gov.au
Last updated
July 2015
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