Quick reference guide 2011–12
Table 1 – Superannuation preservation components
Restricted non-preserved amounts Unrestricted non-preserved amounts
Preserved amounts come from – come from – come from –
Preserved amounts as at 30/6/1999 Restricted non-preserved amounts as at 30/6/1999 Unrestricted non-preserved amounts as at
All contributions from 1/7/1999
Preserved amounts rolled over from another Restricted non-preserved amounts rolled over Unrestricted non-preserved amounts rolled over
super fund from another super fund from another super fund
ETPs rolled over from 1/7/2004 to 30/6/2007 ETPs rolled over before 1/7/2004
DTPs contributed from 1/7/2007 to 30/6/2012 Amounts retained in super where a condition of
release with a NIL cashing restriction has been met
All earnings from 1/7/1999
Table 2 – Superannuation taxation components
Tax-free component comes from the sum of – Taxable component comes from remaining balance, ie the sum of –
Old ETP components as Old ETP components as
at 1 July 2007 Contributions1 made from 1 July 2007 at 1 July 2007 Contributions1 made from 1 July 2007
Undeducted contributions Non-concessional contributions including Post-June 1983 Concessional contributions including employer,
Pre-July 1983 personal, spouse and child contributions Non-qualifying superannuation guarantee, and personal
Government co-contributions deductible contributions
Post-June 1994 invalidity Excessive
Tax-free component of rollovers and excess Certain allocations from fund reserves
untaxed rollovers Taxable component of a rollover (other than an
Tax-free component of a DTP excess untaxed rollover)
Transfers from foreign super, other than Taxable component of a DTP
applicable fund earnings elected by the Applicable fund earnings of a foreign super
member to be treated as a taxable contribution transfer elected by the member to be treated
CGT contributions as a taxable contribution
Contributions of personal injury payments
Contributions from a First Home Saver Account
1 For further information on super contribution eligibility and taxation please refer to the FirstTech Superannuation Contributions Quick Reference Guide available from FirstNet Adviser
at colonialfirststate.com.au .
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Table 3 – Superannuation benefit conditions of release, cashing restrictions and taxation
The following applies if the person is not a temporary resident, that is if the person:
W is an Australian or New Zealand citizen
W is a permanent resident in Australia
W holds a 405 or 410 retirement visa, or
W has never held a temporary visa for Australia.
If the person is a temporary resident of Australia, please refer to page 3 for further information.
Taxation of Taxation of
Taxation of the taxable the taxable
Condition of Can a lump sum the taxable Can an income component – component –
Age release# be paid? component* stream be paid? taxed element* untaxed element*
Age 65 or over Reaching age 65 Yes 0% Yes 0% MTR less 10% tax
Preservation age Reaching No N/A Yes, as a transition to See Table 5 See Table 5
or over preservation age retirement income
stream or other
pension or annuity
Retirement Yes See Table 4 Yes See Table 5 See Table 5
Any age Unrestricted non- Yes See Table 4 Yes See Table 5 See Table 5
(see Table 1)
Termination of No – preserved See Table 4 Yes, but preserved See Table 5 See Table 5
employment with amounts amounts only as a
employer sponsor Yes – restricted non- non-commutable
preserved amounts pension or annuity
paid for life
Financial hardship**– Yes, as a single See Table 4 No N/A N/A
under preservation annual lump sum up
age plus 39 weeks to $10,000
Financial hardship**– Yes See Table 4 Yes See Table 5 See Table 5
plus 39 weeks or over
Compassionate** Yes, a single lump See Table 4 No N/A N/A
grounds sum as approved by
Temporary No N/A Yes, as a salary Whole payment N/A
incapacity continuance taxed as assessable
income stream income at MTR
Permanent Yes See Table 4 Yes Under age 60 – MTR Under age 60 – MTR
incapacity less 15% tax offset Age 60 or over
Age 60 or over – 0% – MTR less
10% tax offset
Terminal medical Yes 0% Yes See Table 5 See Table 5
Death Yes Dependant – 0% Yes, but with MTR less 15% MTR if both
Non-dependant – limitations if the tax offset if both deceased and
W taxed element beneficiary is a child deceased and beneficiary are
– 15% beneficiary are under age 60
under age 60 MTR less 10% tax
element – 30% 0% otherwise offset otherwise
Benefits of less Yes if either – See Table 4 Yes See Table 5 See Table 5
than $200 Terminated work
of the fund
W Lost member
* For all non-zero tax rates, the Medicare levy also applies.
** For more information refer to the flowchart on page 5.
# If no condition of release has been met, including an illegal access to super, the whole super benefit (both taxable and tax-free components) will be treated as assessable income and
taxed at the applicable MTR. Penalties may also apply.
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Taxation of superannuation lump sums and income streams
In all cases, the tax-free component of a super benefit is not assessable and not exempt income and is not subject to tax. The tax
rates below apply only to the taxable component of a super benefit.
Table 4 – Taxation of the taxable component of lump sum super benefits^
Taxable component – Maximum tax Taxable component – Maximum tax
Age taxed element rate* untaxed element rate*
60 and over Whole component 0% First $1.205 million# 15%
Balance over $1.205 million# 45%
Preservation age to age 59 First $165,000† 0% First $165,000† 15%
Balance over $165,000 †
15% $165,000 to $1.205 million
Balance over $1.205 million# 45%
Under preservation age Whole component 20% First $1.205 million# 30%
Balance over $1.205 million# 45%
^ Different tax treatment applies to lump sum super benefits as a result of death.
* For all non-zero tax rates, Medicare levy also applies.
† $165,000 is the low rate cap for 2011/12, indexed annually in $5,000 increments.
# $1.205 million is the untaxed plan cap for 2011/12 , indexed annually in $5,000 increments.
Table 5 – Taxation of the taxable component of superannuation income streams
Age Taxable component – taxed element* Taxable component – untaxed element
60 and over 0% MTR less 10% tax offset
Preservation age to age 59 MTR less 15% tax offset MTR (no tax offset)
Under preservation age MTR (no tax offset) MTR (no tax offset)
* For all non-zero tax rates, Medicare levy also applies.
W a terminal illness benefit, or
W an amount in respect of excess contributions tax.
From 1 April 2009, changes to legislation have restricted the
circumstances in which a temporary resident may be paid a There are different procedures for requesting DASPs above and
super benefit. A person is entitled to a departing Australia below $5,000. For guidance on how to request a DASP, go to
superannuation payment (DASP) benefit* equal to their account the ATO’s information page, Superannuation – information for
balance (less tax), if: temporary residents departing Australia at www.ato.gov.au
W they were not an Australian or New Zealand citizen, Tax is withheld by the fund from the taxable component of a
permanent resident in Australia or did not hold a 405 or 410 DASP benefit outlined in table 6. If a DASP benefit has not been
retirement visa requested within six months of the later of the temporary visa
W the person leaves Australia expiring and the person leaving the country, the trustee may
be required to pay the account balance to the ATO. In these
W the person’s temporary visa has ceased to have effect, and
circumstances the person will no longer be a member of the
W the Department of Immigration provides the trustee written super fund and will lose any insurance cover. Generally, no
evidence of these facts. interest accrues on the account balance from the time it is paid
*DASP benefits may only be paid as a lump sum and cannot be rolled over.
to the ATO. Once the account has been transferred to the ATO, it
A temporary resident or former temporary resident may only may be claimed by contacting the ATO and downloading a DASP
otherwise be paid, or have paid, as the case may be, the application from its website, www.ato.gov.au, or by calling it on
following super benefits: 13 10 20 or emailing it at DASPmail@ato.gov.au
W a death benefit
W a temporary disability benefit in the form of a salary
continuance income stream
W a total and permanent disablement benefit
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Permanent incapacity – ill health (whether physical or
Table 6: Taxation of a DASP
mental) where the trustee is reasonably satisfied that the
Tax component Rate of tax member is unlikely, because of the ill health, to engage in gainful
Tax-free Nil employment for which the member is reasonably qualified by
education, training or experience.
Taxable-taxed element 35%
Personal injury payment – contributions to super that are
Taxable-untaxed element 45%
nominated in a contribution for personal injury form (available
from www.ato.gov.au) that arise from a structured settlement
Definitions payment, an order for a personal injury payment, or a lump sum
workers compensation payment.
Applicable fund earnings – earnings on foreign super while
a person is an Australian tax resident. Preservation age – for those born before 1 July 1960 – age 55,
then increasing by 1 year for each later year of birth to age 60
APRA: Australian Prudential Regulation Authority.
for those born on or after 1 July 1964.
CGT contribution – the contribution to super of all or part
Retirement – There are two parts to the retirement definition,
of the proceeds of the sale of small business assets eligible for
depending upon the age of the person. 1. For a person who
a capital gains tax exemption where the amount contributed
has reached their preservation age, it means an arrangement of
is elected to count towards and does not exceed the relevant
gainful employment has ceased and the person intends never
to again become gainfully employed for more than 10 hours
Compassionate grounds – criteria under which APRA has per week. 2. For a person who has reached age 60, it means an
discretion to allow certain payments of preserved amounts, arrangement of gainful employment has ceased on or after the
subject to fund rules including payment to prevent foreclosure person reaching age 60.
of a home mortgage, payment to modify a home or vehicle due
Rolled over/rollover – the payment of a super benefit from
to severe disability or to pay for certain medical, palliative care
one Australian super fund to another. If the paying fund is one
or funeral expenses (for more information refer to page 5).
which does not pay earnings tax, the rollover is referred to as an
DTP – directed termination payment, which is a payment untaxed rollover.
made by an employer as a consequence of the termination
Salary continuance income stream – a non-commutable
of employment of an employee that the employee elects to
income stream that is paid at least monthly for the duration of a
contribute to super under transitional rules prior to 30 June 2012.
person’s temporary incapacity, has no residual capital value and
Employer sponsor – an employer who contributes to a is indexed at no more than either 5% pa or the CPI.
superannuation fund on behalf of an employee.
Standard employer sponsor – an employer who contributes
ETP – employment termination payment, which is a payment to a fund under an arrangement between the fund trustee
made by an employer as a consequence of the termination of and the employer (rather than through an agreement with
employment of an employee, subject to certain exceptions. the member).
Financial hardship – For a person who is under preservation Temporary incapacity – physical or mental ill health that is not
age plus 39 weeks – being in receipt of Commonwealth income permanent incapacity but which causes a member temporarily
support payments for a continuous period of at least 26 weeks to cease to be gainfully employed.
and unable to meet reasonable and immediate living expenses.
Terminal medical condition – an illness or injury that is
For a person who is preservation age plus 39 weeks or more –
certified by two medical practitioners (one a specialist) as being
being in receipt of Commonwealth income support payments
likely to lead to death within 12 months.
for a cumulative period of 39 weeks since reaching preservation
age and not gainfully employed either part-time or full-time (for Transition to retirement income stream –an account based
more information refer to page 5). pension or annuity that limits the total amount of payments
in any year to 10% of the account balance at the start of each
MTR – marginal tax rates, applicable to an individual’s
year and that cannot be paid as a lump sum benefit other than
to cash unrestricted non-preserved amounts or following a
Non-commutable pension/annuity – one of the following condition of release with a NIL cashing restriction.
types of pension or annuity that is non-commutable (ie cannot
be paid as a lump sum benefit other than to cash unrestricted
non-preserved amounts or following a condition of release with
a NIL cashing restriction): non-commutable allocated pension or
annuity, non-commutable pension or annuity paid for life, non-
commutable pension or annuity (including one that is market
linked) paid for a fixed term based on life expectancy.
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Early release of superannuation benefits
Condition Severe financial hardship Compassionate grounds
Application Trustee of the super fund APRA
made to: (but the final decision to release benefits is with the trustee of the super fund)
Applicant’s Any age Aged from preservation Any age
age: age1 + 39 weeks
The trustee is satisfied, based on The trustee is satisfied, based on APRA is satisfied the applicant does not have the financial capacity to meet
written evidence from a relevant written evidence from a relevant one of the following expenses:
⎧ Commonwealth department or Commonwealth department or
⏐ agency, that the person has been in agency, that the person has been in Medical treatment or transport for the To make a payment on a loan to
⏐ receipt of Commonwealth income receipt of Commonwealth income applicant or a dependant (must be prevent foreclosure of a mortgage
support for 26 continuous weeks. support for 39 cumulative weeks after life threatening or to alleviate acute or on their principal residence or the
⏐ reaching preservation age1. chronic pain or mental disturbance) exercise by a mortgagee of a power
⏐ and the treatment must not be of sale over the person’s principal
⏐ readily available through the public residence. Evidence must be provided
health system. by the mortgagee that a loan
⏐ payment is overdue and that if not
Eligibility ⏐ AND OR paid, foreclosure or sale action will
⏐ The person was in receipt of those To make medical-related
⏐ payments at the time of application; modifications to the principal home,
or vehicle, for special needs.
⏐ AND AND OR
⏐ The person is unable to meet The person is not gainfully employed To cover expenses in relation to a
reasonable and immediate family on either a part-time or full-time basis dependant’s palliative care, in the case
⎩ living expenses. on the date of application. of impending death or to meet their
death, funeral or burial costs.
A single lump sum of not less than No restrictions. A single lump sum not exceeding an The amount released in each 12 month
Cashing $1,0002 and not more than $10,000 in amount that is reasonably required. period must not exceed three months
restrictions: a 12 month period. of repayments plus 12 months interest
on the outstanding loan balance.
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1 If the person was born before 1 July 1960 their preservation age is 55. This age gradually increases to age 60 if the person was born after 30 June 1964.
2 If the person’s super benefit is less than $1,000 then this amount is able to be cashed under severe financial hardship.
Further detail about the concepts and definitions in this guide can be found in the FirstTech Super Guide available from FirstNet Adviser at colonialfirststate.com.au .
Adviser Services 13 18 36 email@example.com
The information contained in this FirstTech document is based on the understanding Colonial First State Investments Limited ABN 98 002 348 352 AFS Licence 232468 (Colonial First State) has of
the relevant Australian laws as at the time of preparation. The information is for adviser use only. While all care has been taken in the preparation of this document (using sources believed to be
reliable and accurate), no person, including Colonial First State or any other member of the Commonwealth Bank group of companies, accepts responsibility for any loss suffered by any person
arising from reliance on this information. This document is not financial product advice and does not take into account any individual’s objectives, financial situation or needs. This is a guide only
and should not be relied on by you or your clients in substitution for you or your clients obtaining specialist taxation advice.
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