Since 1 July 1988, State Super has been required to pay Commonwealth tax on the employer contributions used to finance your benefits. In addition, tax is payable on any contributions you make on a salary sacrifice basis. Your benefits will be reduced to offset this tax.
The benefit may also be reduced by:
- any contributions surcharge tax debt
- benefit amounts already paid to you on financial hardship or compassionate grounds.
The amounts shown in the Annual Statement we send you each year are calculated after the benefit reduction has been applied.
If you are over age 60, any benefits paid to you (as a lump sum or, if applicable, as a pension) are tax free and not assessable for income tax purposes.
If you are under age 60, all benefits are subject to Commonwealth benefits or income tax. The actual tax payable varies depending on issues including:
- the type of benefit taken
- your tax-free amount
- your eligible service period
- your age
- your reason for terminating employment.
The tax will be calculated and deducted from your benefit at the time of payment.
Taxation can have a significant impact on the benefits you receive, so it is important you understand the tax rules or consult an expert adviser.
Your tax-free amount
Your tax-free amount comprises:
- the total of your after-tax personal contributions paid into SSS since 1 July 1983 (or the date you joined the scheme, if later). These contributions are now called non-concessional contributions (previously called undeducted contributions)
- any Commonwealth Government co-contributions and LISTO
- the proportion of your benefits (if any) that relates to service before 1 July 1983. In accordance with Commonwealth tax requirements, this component was calculated at 30 June 2007.
Your tax-free amount and eligible service period start date are shown on your Annual Statement. The tax-free amount is apportioned between the benefits you receive from the scheme (including the basic benefit).
The tax treatment of superannuation is complex. An overview is contained in STC Fact Sheet 3: Taxation.