Life Admin Hub  ›  Tax  ›  Are Super Withdrawals Tax Free In Australia?

Are Super Withdrawals Tax Free In Australia?

Are you wondering how your super reacts to tax? Maybe you’re asking questions like “Why am I getting taxed on my super” and “do I get taxed on my super withdrawals”. 

We know super can be super-confusing, but there’s no need to panic. 

We’re here to help. 

One Click Life has a whole team of dedicated professionals that are able to super-easily help you with your tax and super. Also, in this article we are going to run you through some of the most common questions that people have about their super, and if they get taxed on their withdrawals. 

So sit back, get comfortable, and keep on reading below. 

What is superannuation? 

Your superannuation, or often known as “super” is money that your employer must put aside for you over your working life. Consider it a sort of forced savings for when you retire. 

The more you save, the more money you’ll have for when you retire. 

It’s usually a good idea to leave this money in your account because superannuation accounts compound – which means the more money that’s in there the more money it will generate. 

What is the super preservation age? 

The preservation age is the age you have to be in order to retire and access your super. The preservation age for super will change depending on when you were born. 

What age can I access my super? 

Date of birth Preservation age 
Born before 1st of July 196055
Born between 1st of July 1960 and 30th of June 196156
Born between 1st of July 1961 and 30th of June 196257
Born between 1st of July 1962 and 30th of June 196358
Born between 1st of July 1963 and 30th of June 196459
Born after 30th of June 196460

Superannuation conditions of release 

Outside of reaching the preservation age, are there any other ways that you can access your super? The answer is yes. There are specific conditions of release that will allow you to access your super: 

  • You reach preservation age and retire 
  • You are 65 years old (even if you haven’t retired) 
  • COVID-19 early release 
  • Compassionate grounds 
  • Severe financial hardship 
  • Terminal medical condition 
  • Temporary incapacity 
  • Permanent incapacity 
  • Super less than $200 
  • Temporary or non- resident leaving Australia permanently

We get it. Trying to work out if you fit into one of these conditions of release can be pretty confusing. For some reassurance and help with your superannuation, you should have a go at using our super easy-to-use Life Admin platform, One Click Life. Simply make an account and get help from some of the friendliest professionals in the industry. 

What are superannuation contributions 

Superannuation contributions, to make it short, is another name that is used to say “the money your employer puts into your superannuation account”. Every time you get paid, your employer will make superannuation contributions into your superannuation account.

Is superannuation taxed?

In short, yes. Your superannuation contributions are taxed at a flat rate of 15% (which also includes salary-sacrificed contributions). 

However, there are some exceptions to the rule: 

  • If you earn less than $37,000, your tax is paid into your superannuation account thanks to the Low-Income Super Tax Offset (LISTO). 
  • If your income and super contributions combined equal more than $250,000 you have to pay an extra 15%.
  • If you make contributions from your after-tax income (non-concessional contributions) you don’t have to pay any contributions tax. 

Get help from one of our tax professionals on our easy-to-use platform and make sure you’re handling your super the right way. 

Are super withdrawals tax free? 

Everyone’s financial situation is different, and everyone’s financial situation will react differently to tax.  When it comes to super withdrawals, the amount you get taxed depends on how you withdraw it. 

Super income stream 

This kind of withdrawal is when you make small frequent withdrawals of your super over time. Sort of as if you were paying your own salary. 

If you’re over 60 years old this is usually tax free.

If you’re under 60, you will most likely have to pay tax on your super income stream. 

Lump sum withdrawals 

If you’re over 60 and withdraw a lump sum:

  • You don’t pay any tax when you withdraw from a taxed super account. 
  • You might pay tax if you withdraw your super from an untaxed super fund (like a public sector fund). 

However, if you’re under 60:

  • You won’t pay tax if your withdrawal is under the low rate threshold of $225,000.
  • If you withdraw over $225,000, you pay 17% tax plus the medicare levy (or your marginal tax rate if it is lower). 

If you haven’t reached your preservation age, you will pay 22% plus the medicare levy (or your marginal tax rate if it is lower). 

When can I access my super tax free? 

You can claim tax free superannuation when you reach your preservation age, which will be at worst 60.

What to do if you need help with your superannuation and tax

The way taxation works with superannuation is super tricky, so if you’re thinking of withdrawing any or making a contribution you should ask us for some help. 

One Click Life offers online Tax Returns at your fingertips in an easy-to-use platform run by industry professionals. Our Tax Returns can take less than 5 minutes!

You can also claim your tax agent/tax return fees back on tax (this includes One Click Life!), so why wouldn’t you let us help you minimise your tax and maximise your money?

Taxes, Health Insurance, and Wills can be time-consuming and tedious. Our app allows you to be able to do this fuss-free, giving you a simple way to organise, track and manage all of your life admin in one place.

Let One Click Life take care of your Tax Return and life’s essential tasks, so you can spend more time doing the things you love.