Tax and income streams

It’s important to tell us your Tax File Number, you may pay more PAYG tax than you need to. Click here to find out more.

A First State Super Retirement Income Stream and Transition to Retirement Income Stream offers a number of tax benefits:

  • Generally, no tax is payable when you roll over your superannuation benefits into your income stream account. 
  • Any earnings on your income stream account are tax free while they remain in your account. 
  • While income stream payments are taxed in a similar way to salary, you may qualify for a 15% tax offset and part of your income stream payment may be tax free (called a “tax free component”).
  • You receive tax-free income stream payments after age 60.

Find out more about tax and income streams: 

You should obtain taxation advice from your tax adviser or accountant in regard to your personal circumstances. 


Tax on income stream payments

If you are aged 60 and above no tax is payable on a superannuation lump sums or income stream benefit payments.

If you are under aged 60

Income stream payments are made up of a taxable component and a tax free component. The amount of tax you have to pay on your taxable component depends on whether or not the Fund has your tax file number (TFN).

Tax rates* used on taxable component of income stream payments:

Age
Fund holds TFN
Fund does not hold TFN
Over preservation age but under age 60
  • Tax is withheld at the highest marginal tax rate
Under preservation age
  • Personal marginal tax rate
  • No 15% tax offset (unless payment is a disability superannuation benefit)
  • Tax is withheld at the highest marginal tax rate

* Plus Medicare levy (currently 1.5%) 

If your income stream account has a tax free component, your income stream payments will also have a tax free component.

Click here to calculate an estimate of the tax free component of your income stream.

Tax on payment of lump sum benefits

Click here to find out how lump sum benefits are taxed. 

Tax on death benefits

In the event of your death where you have nominated a reversionary beneficiary your spouse may continue to receive the balance of your income stream account and may be entitled to tax concessions. Generally, if at the time of your death you are:

  • age 60 or above, the income stream is tax free for your spouse.
  • under age 60, the income stream is tax free for your spouse if he/she is age 60 or above. 
  • under age 60, and your spouse is under age 60 no tax will be payable on the tax free component and the taxable component will be taxed at your spouse’s marginal tax rate (15% tax offset may apply) Once your spouse turns age 60 the income stream will be tax free. 

Otherwise, your income stream account on your death will be paid out as a lump sum and generally taxed as follows: 

  • If paid to a dependant for tax purposes, the lump sum will be tax free.
  • If paid to a person who is not a dependant for tax purposes, the tax-free component of the lump sum amount will be tax free. Tax at a maximum rate of 15% plus Medicare levy will be payable in respect of the taxable component of the lump sum.

No tax is payable on a superannuation lump sum or income stream benefit payment on or after the age of 60.  

NOTE: The government has introduced a temporary flood levy on income for the 2011-12 financial year only. Your payments may be subject to the flood levy, depending on the amount and the components of the benefit or income payment. To determine whether the flood levy will apply to a superannuation benefit or payment, we recommend that you seek professional tax advice.