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| FIND AN ADVISER | INVESTMENT | INSURANCE | SUPERANNUATION |
| | Home | Superannuation | Changes to super | Changes to benefits | |
Changes to benefits
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In addition to changing how you contribute to superannuation, new rules from 1 July 2007 will alter how you can access your superannuation benefits. Some of these changes include: |
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Maintaining superannuation benefits
New rules no longer require you to cash in your superannuation benefits once you reach 65 years of age and are no longer working.
Instead, you now have the opportunity to maintain your investment in the superannuation environment for as long as you like.
Abolition of reasonable benefit limits
Any benefits which you receive from your superannuation accumulation account on or after 1 July 2007 will no longer be measured against reasonable benefit limits.
Simplified superannuation components
If in the past you received a superannuation benefit, the benefit may have been made up of a number of different components, each taxed at a different rate. Benefits received on or after 1 July 2007 will generally contain only two components:
- a tax-free component, and
- a taxable component – taxed element.
If you receive a benefit as the result of the death of another person, you may also receive a third component: a taxable component – untaxed element.
Tax on lump-sum withdrawals and pension income
Changes from 1 July 2007 mean the tax you pay on any superannuation benefits you receive may change.
The good news is that any lump sum or pension payments and/or withdrawals will not be taxed if you are over 60.
The chart below illustrates the tax rates payable on lump sum superannuation benefit payments.
Members under 60 years of age and receiving an income stream may be subject to Pay As You Go (PAYG) tax.
Your superannuation death benefits
- In the event of your death, if a superannuation trustee pays a death benefit in the form of a lump sum or income stream to a dependant, the death benefit may be tax free. A dependant for this purpose is:
- your spouse
- any of your children under 18 years of age, or
- any person who was either financially dependent on you, or had an interdependent relationship with you, immediately prior to your death.
If the benefit is paid as a lump sum to any other person, whether directly or via your estate, any:
- taxed component – taxed element will be taxed at 16.5 per cent (including 1.5 per cent Medicare levy), and
- taxed component – untaxed element will be taxed at 31.5 per cent (including 1.5 per cent Medicare levy).
If the benefit is paid as an income stream to your dependant, the payments will be tax free if you were over 60 years of age at the time of your death or if your dependant is over 60 years of age when an income payment is received.
If this not the case, the taxable component of the income payment will be taxed at your beneficiary’s marginal tax rate. However they will benefit from a tax offset equal to 15 per cent of that taxable amount.
Importantly, from 1 July 2007, your superannuation fund trustees will generally not be able to commence paying a death benefit pension to a person who is not your dependant.
If you believe that these changes to the death benefit rules will cause you to reconsider who you would like your superannuation benefit to be paid to in the event of your death, you should contact your financial adviser or call AXA on 137 292. Alternatively, to find a financial adviser, please complete the online form.
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