Do You Have to Pay Taxes on Superannuation Earnings Over 60?

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Australia’s super system is designed to give its citizens a comfortable retirement by delivering continuous income. To access these funds, however, one must have reached the preservation age and meet certain conditions of release beforehand.

Once you reach the age of sixty, you can withdraw your superannuation benefits without incurring any taxation. This is a standard indicator that preservation has already occurred – giving you ample time and resources to plan for retirement accordingly.

In some instances, the additional super contribution may be subject to income tax at the marginal rate. This is most likely when a person belongs to an untaxed superannuation fund.

“The Australian Taxation Office (ATO) reports that 72 per cent of all superannuation income from retirees over the age of sixty is tax-free,” said Emily Baxendale, a financial planner with Aus-X. “In some cases, however, additional earnings on your superannuation may be taxable.”

In certain circumstances, mandatory contributions from the employer or voluntary contributions made by the individual are subject to taxation. To determine if your income is taxable after reaching the preservation age of sixty, you must first understand the type of superannuation fund from which you are withdrawing.

If your superannuation is from a taxed source, any income earned before or after reaching the preservation age of sixty will not be subject to taxation.

In contrast, if your retirement savings come from an untaxed scheme, contributions and earnings made before the preservation age may be subject to taxation.

The ATO also notes that all earnings made before age sixty, regardless of superannuation fund type, are taxable. This is in addition to your contributions since reaching the preservation age.

“It is important to be mindful of the potential tax implications when withdrawing your superannuation,” said Baxendale. “By familiarising yourself with the taxation rules, you can ensure that you can access your retirement savings most advantageously.”

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