Saving tax by deferring a lump sum super withdrawal

Depending on your age, your super is subject to different tax conditions. You may want to consider deferring taking money out of super if you are under the age of 60.

You could benefit from significant tax savings if you withdraw super after the age of 60 because lump sums can be taken tax free if from a taxed source.

The following is an example of where this might be appropriate:

Jenny, aged 58, has $300,000 in super which is all taxable. She would like to receive a lump sum payment of super. If she was to take her entire benefit now, the first $145,000 up to the ?low rate cap? can be taken tax free, with the remainder taxed at 15%, meaning she would be liable for $23,250 in tax. If she defers this until she turns 60, she will not be required to pay any lump sum tax, meaning a saving of $23,250.