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Aussie superannuation withdrawal at maturity


Kenny202

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Hi all. Eligible for my super next year. Just wondering if anyone knows....does the Super Company deduct taxes (if applicable) on payout or is that sorted at tax time when you put in your tax return?

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32 minutes ago, Kenny202 said:

Hi all. Eligible for my super next year. Just wondering if anyone knows....does the Super Company deduct taxes (if applicable) on payout or is that sorted at tax time when you put in your tax return?

 

There are no special tax rates for a super withdrawal because of severe financial hardship. It is paid and taxed as a normal super lump sum. If you are under 60 years old, this is generally taxed between 17% and 22%. If you are older than 60 years old, you will not be taxed.

 

https://www.ato.gov.au/individuals/super/withdrawing-and-using-your-super/early-access-to-your-super/#:~:text=There are no special tax,you will not be taxed.

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There is no tax on withdrawal if you have a taxed super fund and you are turning 60 . It will not be a taxed fund unless you have a defined benefit fund such as for longer term public servants such as myself. At the time I turn 60 I'll have a bit of tax but if I wait till 60 there are offsets that reduce it close to nil. If you have a normal super fund there is no tax. 

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I am under the impression of my birth date (May 1963) I can withdraw up to $205k out without penalty or taxation at 58yo? Does that sound right?

 

But over and above that, if there was tax payable for any reason (and pretty sure there isn't), would the super fund manager take the tax out before they paid me.... or do you get your total amount.....and if there is any tax due, it is payable after lodging your next tax return?

 

The reason I am asking is whenever I have broached the subject with the Super fund manager, they have referred me back to my tax agent, with wishy washy details of maybe some tax will be payable....and my reply is always how would my tax agent know if there was anything payable? You guys have all the details of my fund etc. I had always assume the tax was taken out before you got your lump sum and the Super fund manager calculated and deducted all that and the penny has just dropped with me that maybe they were referring me to my tax agent as the tax comes out or is tallied after I get my payout and sorted at tax time, in conjunction with any other income etc.

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In your situation it appears at 58 you have reached preservation age but are under 60 so you can take the first $215,000 of the taxable component  tax free in 2020/21.

If you've just put money in through  after tax amounts and not through salary sacrifice or an amount that had been claimed as a deduction there should not be a taxable bit. Your super fund might not want to give tax advice as that is beyond their role. They should though be able to say that x amount is a tax free component and y amount the taxable component and if y is under $215,000 you'll be fine. 

So if you had a total of $350,000 consisting of $100,000 tax free component and $250,000 taxable component you would pay nil on the $100,000, nil on a further $215,000 and 17 per cent on the remaining $35,000. 

I cannot see that the superfund withholds on the tax. The  details I see refer you to paying it, if necessary, after lodging the tax return. 

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11 minutes ago, Fat is a type of crazy said:

In your situation it appears at 58 you have reached preservation age but are under 60 so you can take the first $215,000 of the taxable component  tax free in 2020/21.

If you've just put money in through  after tax amounts and not through salary sacrifice or an amount that had been claimed as a deduction there should not be a taxable bit. Your super fund might not want to give tax advice as that is beyond their role. They should though be able to say that x amount is a tax free component and y amount the taxable component and if y is under $215,000 you'll be fine. 

So if you had a total of $350,000 consisting of $100,000 tax free component and $250,000 taxable component you would pay nil on the $100,000, nil on a further $215,000 and 17 per cent on the remaining $35,000. 

I cannot see that the superfund withholds on the tax. The  details I see refer you to paying it, if necessary, after lodging the tax return. 

Thanks mate. I know we have talked about this before. They would give me no information on that stuff at all aka too lazy to go and check. In the end they conceded they didn't think there would be any tax payable but I got the feeling they still didn't go and check, only were paying lip service. I haven't even explored options yet maybe I may leave it there do a draw down pension or something. Need to explore that sooner than later and if you have any ideas you can PM me if you would be so kind. I have to be very careful what I do though now as after this week lodging 5 years of back tax returns Only small amounts of interest) I will now be declared as a non resident for tax purposes. Ie any income I make will be taxed at full flat rate foreigner tax.

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2 minutes ago, Kenny202 said:

Thanks mate. I know we have talked about this before. They would give me no information on that stuff at all aka too lazy to go and check. In the end they conceded they didn't think there would be any tax payable but I got the feeling they still didn't go and check, only were paying lip service. I haven't even explored options yet maybe I may leave it there do a draw down pension or something. Need to explore that sooner than later and if you have any ideas you can PM me if you would be so kind. I have to be very careful what I do though now as after this week lodging 5 years of back tax returns Only small amounts of interest) I will now be declared as a non resident for tax purposes. Ie any income I make will be taxed at full flat rate foreigner tax.

No worries. It's surprising sometimes there isn't clearer information available .. it might still be worth getting advice  given the non-resident aspect of it. I would get the super fund to confirm the different component amounts of your super - they should be able to do that. Then I'd call ATO and be persistent and you'll find someone who knows this stuff back to front   - if who you are talking to is a bit vague just say thanks but could they please escalate it as you need a clear response and keep doing that till you find that person. If that doesn't work maybe get an accountant - a good one should be able to advise you in an hour.

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Kenny I'm sure you are aware however I didn't see it mentioned in any of your posts but inorder to take a lump sum or income stream at preservation age you need to meet one of the conditions below.

 

Taking a super lump sum is an option if you have reached your preservation age and met a condition of release. Your preservation age is between 55 and 60, depending on your date of birth. Standard conditions of release for lump sum super withdrawals are:

  • retirement,
  • ceasing an employment arrangement after the age of 60, even if you get a job with a new employer,
  • turning 65 years of age,
  • becoming permanently incapacitated,
  • being diagnosed with a terminal medical condition

We're both the same age and coincidently my birthday falls in May as well. 

I've decided to take an income stream and I'm using retirement as the reason. I need to check with my financial planner what exactly I need to do, what forms or proof I need to show. 

 

By the way these financial Super company's won't give you much info especially if you're withdrawing money, because they will receive less commission from you.

 

 

 

 

 

 

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1 hour ago, GrahamJ said:

Kenny I'm sure you are aware however I didn't see it mentioned in any of your posts but inorder to take a lump sum or income stream at preservation age you need to meet one of the conditions below.

 

Taking a super lump sum is an option if you have reached your preservation age and met a condition of release. Your preservation age is between 55 and 60, depending on your date of birth. Standard conditions of release for lump sum super withdrawals are:

  • retirement,
  • ceasing an employment arrangement after the age of 60, even if you get a job with a new employer,
  • turning 65 years of age,
  • becoming permanently incapacitated,
  • being diagnosed with a terminal medical condition

We're both the same age and coincidently my birthday falls in May as well. 

I've decided to take an income stream and I'm using retirement as the reason. I need to check with my financial planner what exactly I need to do, what forms or proof I need to show. 

 

By the way these financial Super company's won't give you much info especially if you're withdrawing money, because they will receive less commission from you.

 

 

 

 

 

 

I kind of gathered they didn't seem to want to be too helpful parting with my money. I have retired. been retired since 48yo actually when I left Australia. Haven't worked in Thai or Australia. How do they ascertain you have retired? Is there any requirement?

 

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41 minutes ago, Kenny202 said:

I kind of gathered they didn't seem to want to be too helpful parting with my money. I have retired. been retired since 48yo actually when I left Australia. Haven't worked in Thai or Australia. How do they ascertain you have retired? Is there any requirement?

 

That's what I need to find out, I'll speak with my financial guy. There has to be some form that you need to fill in. It can't be that easy to send them an email to  say I'm retired. When I find out I'll let you know.

 

 

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This can be all rather confusing at times.

 

I was lucky to be in a super fund which provided some basic financial and tax advice, for free.

 

I took early retirement at 58.  Before doing so I asked for and was given some basic financial and tax advice on the various options available to me.

 

If your super fund does not offer such advice, then you really need to get all the details about your super plan, and seek tax advice from a professional.

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As noted in other responses you will be able to withdraw the amount tax free.

 

Just be careful if you are looking at a funded pension arrangement as a non-resident (Australian) for tax purposes. If tax is payable, you will be subject to the flat rate with no tax offsets.

 

An Allocated Pension is a better option because payments out of this are tax free. In addition, you can draw out lump-sums tax free at any point in time.

 

For example, an Allocated Pension starting with $200,000, paying a monthly pension of 4%, would give you about $670 per month, tax free. You can expect the invested $200,000 to grow at the same rate as a good Super account (e.g. at least 10%), so the account will continue to grow well ahead of inflation (even taking out your pension). You could easily cash out $5,000 - $10,000 tax free each year and still maintain a growing capital at 5% or more, all tax free.

 

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20 hours ago, Kenny202 said:

they have referred me back to my tax agent, with wishy washy details of maybe some tax will be payable

This is typical in OZ as with the banks who will answer with see a lawyer, It was a simple question "can i put a named beneficiary on my account, (a Thai and UK bank gave me a detailed e-mail when asking the same question)   to scared of mitigating themselves, even had an employer that would not give me a reference, on leaving after 2yrs, his reason was words to the effect  of '' if you stuff up, they would hold him responsible'' pathetic! 

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1 hour ago, Stevemercer said:

As noted in other responses you will be able to withdraw the amount tax free.

 

Just be careful if you are looking at a funded pension arrangement as a non-resident (Australian) for tax purposes. If tax is payable, you will be subject to the flat rate with no tax offsets.

 

An Allocated Pension is a better option because payments out of this are tax free. In addition, you can draw out lump-sums tax free at any point in time.

 

For example, an Allocated Pension starting with $200,000, paying a monthly pension of 4%, would give you about $670 per month, tax free. You can expect the invested $200,000 to grow at the same rate as a good Super account (e.g. at least 10%), so the account will continue to grow well ahead of inflation (even taking out your pension). You could easily cash out $5,000 - $10,000 tax free each year and still maintain a growing capital at 5% or more, all tax free.

 

Thanks Steve. When you say a cash out of 5000-10000 yearly, I assume you are talking about the monthly amount you suggested x 12, not an extra 10000 on top of that? If you can recommend someone mate please PM me. I been with CM last 10 years and yeah, huge non performer

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20 hours ago, Fat is a type of crazy said:

No worries. It's surprising sometimes there isn't clearer information available .. it might still be worth getting advice  given the non-resident aspect of it. I would get the super fund to confirm the different component amounts of your super - they should be able to do that. Then I'd call ATO and be persistent and you'll find someone who knows this stuff back to front   - if who you are talking to is a bit vague just say thanks but could they please escalate it as you need a clear response and keep doing that till you find that person. If that doesn't work maybe get an accountant - a good one should be able to advise you in an hour.

Its not suprising....  its been a mess and constant <deleted> arount it all ....

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Hi i am in the same boat here , i have just turned 62 and i have also been in discussion with Centerlink about my Super and Aged Pension when i turn 67 years old.

I will have to return to Australia at about 63 1/2 years and go on the Dole, as i have lived in thailand for nearly 21 years and i have lost my Oz Residence but thats no big deal i will get my Medicare back when i return there in 1.5 years time.

By returning early to Oz Centerlink will assess me for the Pension at 66.5 years and because i have returned to Oz early i will not be penalized and loose my pension if i leave the country or suppliment payments

If you have worked for more than 35 years you automatically qualify for the aged Pension but if you are a non Resident you will get the pension but when you leave Oz after 28 days your pension will cease until you return back to Oz .

If you are legally married in Thailand and Intend to return to Thailand  tell Centerlink you are separated and you will receive the full single payment of $24,554.00

Your Super will come under the Asset Test even if you are currently drawing down on your super after you go on the aged pension.

1/ after 60 years it is tax free and you can live anywhere in the world and draw down on your funds but come under the asset test at 67

2/ You Must  notify the ATO of your retirement prior to the age in my case 67 if i wish to cease working fulltime.

3/ Bank your pension in Oz and when you come to Oz Declare the Funds when you leave .

4/ I am drawing down my super currently at 6% Yearly 1 payment and i also declair that money when i leave to come back to Thailand.

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2 hours ago, Kenny202 said:

Thanks Steve. When you say a cash out of 5000-10000 yearly, I assume you are talking about the monthly amount you suggested x 12, not an extra 10000 on top of that? If you can recommend someone mate please PM me. I been with CM last 10 years and yeah, huge non performer

 

Sorry. The Government requires you to take out a certain minimum each year (used to be 4%, but reduced recently) depending on your age. So the minimum 4% is the monthly $670 I referred to.

 

An advantage of an Allocated Pension is that you can also withdraw a capital sum, at any time, also tax free. In my example, you could withdraw an extra $5 - 10,000 per year without biting into the original $200,000 assuming a medium risk investment strategy for the capital. Earnings and interest are also tax free.

 

In my case, I put part ($200,000) of my Super payout into an allocated pension some 6 years ago when I retired. My 4% ($8000 per year) is paid out to me monthly. I also took out an extra $10,000 each year for the last 6 years (e.g. $60,000). Since this is tax free it does not count as assessable income for taxation purposes (useful if you are a non-resident).

 

So this means I have taken out $48,000 (6 years at $8000 per year), plus an extra $60,000 ad hoc cash withdrawals, for a total of $108,000. Despite this, my capital at January 2020 (before Covid) was still about $215,000.

 

It's taken a pounding with Covid (down to about $165,000 mid-2020) and I haven't withdrawn any capital (I still get my monthly allocated pension). However, it is nearly recovered to the original $200,000 now. Once it is over that amount, I might withdraw another lump sum.

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