Could you please advise me that when I turn 55, and have a SMSF, the income from that SMSF will be only taxed at 15%?
A: Thanks for the question.
When you turn 55 and take money out of super (presumably as a pension), it will be taxed as follows:
- The tax free component will be tax free (this generally represents the return of your non-concessional contributions);
- The taxable element will be taxed at your marginal rate. You will then be entitled to a 15% tax offset (the taxable element represents your concessional contributions, plus the earnings of the fund).
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For example, say your super balance is $300,000 – and you commence a transition to retirement pension. You take out the minimum – or 4% - $12,000.
Let’s assume that of your super balance, 10% is a tax free component, and 90% is a taxed element.
This means that of your $12,000 pension - $1,200 will be tax free, and $10,800 will count as the taxed element.
So, the tax you will pay:
$1,200 – tax free.
$10,800 – taxed at your marginal rate (added to your taxable income).
Against this, you will have a tax offset of 15% of $10,800 – or $1,620
Hope this helps.