Are your UniSuper income payments tax free?
Most UniSuper income payments are tax-free for everyone aged 60 and over.
However, depending on your age and the type of account you have, there are cases where tax applies. You may also pay tax on lump-sum withdrawals.
Explore the UniSuper accounts below to see the tax implications for your retirement income payments.
Flexi Pension
When you receive payments from your retirement income account, your age and the type of Flexi Pension you have determines whether it's tax-free.
Are you aged 60 or over?
If you're aged 60 years or over and have a Flexi Pension account, your income stream payments and any lump-sum withdrawals are tax-free.
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Are you under 60?
If you’re under 60 and have a Flexi Pension account, your income stream payments and lump-sum withdrawals may be subject to tax.
The amount of tax you pay on your income stream payments depends on your age. In addition, there are different tax rates depending on whether you received a lump-sum withdrawal/s or regular income stream payments.
Note: Withdrawals that include a tax-free component will not be subject to tax on the portion that is attributable to the tax-free component.
Making regular income payments under your preservation age
Generally, you’ll pay tax on your income stream payments at your marginal tax rate (including Medicare levy).
For more information about your preservation age, read our article When can I access my super for retirement?
Making regular income payments between your preservation age and 60
You’ll pay tax on your income stream payments at your marginal tax rate, including Medicare levy, less a 15% tax offset
Different rules apply for Beneficiary Income Stream Flexi Pensions accounts, so check the Flexi Pension Product Disclosure Statement (PDF, 2.1 MB)if you have this type of account.
Making lump-sum withdrawals under your preservation age
You’ll pay tax on your withdrawal at a rate of up to 22%, including the Medicare levy.
Making lump-sum withdrawals between your preservation age and 60
You won’t pay tax on your withdrawal up to the low-rate cap amount, which is $235,000 for the 2023-24 financial year. The low-rate cap is a lifetime limit, so each withdrawal you make takes you closer to the cap. Once you go above the cap, you’ll pay tax at 17% (including the Medicare levy), or your marginal tax rate, whichever is lower.
If we don’t have your Tax File Number (TFN), you may pay more tax. You can add or update your TFN by logging in to your online account.
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Tax on investment earnings
Generally, no tax applies to investment earnings for Retirement Phase and Beneficiary Income Stream Flexi Pension accounts.
However, generally a 15% tax applies to investment earnings for Transition to Retirement Flexi Pension accounts.
Remember, you’ll also pay tax on super contributions and investment earnings in your super account (i.e. your accumulation account). Discover more about how your super is taxed.
Read more in the Flexi Pension Product Disclosure Statement (PDF, 2.1 MB).
Defined Benefit Indexed Pension
Are you aged 60 or over?
Your income payments are generally tax-free up to the defined benefit income cap, which is $118,750 per annum for the 2023-24 financial year.
This cap includes all lifetime and defined benefit income streams you have, not just those you have with UniSuper. If you go over this cap, 50% of the amount over $118,750 is included in your assessable income and you may pay income tax on it.
How the Defined Benefit Income Cap works
Lisa receives an annual income of $130,000 from her Defined Benefit Indexed Pension (DBIP).
Tax-free amount = $118,750
Excess amount = $11,250
Taxable amount (included in assessable income) = $5,625 (50% of the $11,250 excess)
We may withhold the tax from Lisa’s income stream payments. We recommend you seek financial advice before applying for a DBIP.
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Are you under 60?
If you're under 60 years old, your income stream payments are taxed at your marginal rate (including Medicare levy).
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Are you between your preservation age and 60?
You’ll still pay tax on your income stream payments at your marginal tax rate, including Medicare levy, but you’ll be eligible for a 15% tax offset.
Read more about how your income payments are taxed in the Defined Benefit Indexed Pension Product Disclosure Statement (PDF, 3.4 MB).
Lifetime Income account
Are you aged 60 or over?
Your income payments are generally tax-free up to the defined benefit income cap, which is $118,750 for the 2023-24 financial year.
This cap includes all lifetime and defined benefit income streams you have, not just those you have with UniSuper. If you go over this cap, 50% of the amount over $118,750 is included in your assessable income and you may pay income tax on it.
How the Defined Benefit Income Cap works
Stephan receives an annual income of $130,000 from his Lifetime Income account.
Tax-free amount = $118,750
Excess amount = $11,250
Taxable amount (included in assessable income) = $5,625 (50% of the $11,250 excess)
We may withhold the tax from Stephan’s income payments. We recommend you seek financial advice before applying for a Lifetime Income account.
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Are you under 60?
If you're under 60 years old, your income stream payments are taxed at your marginal rate (including Medicare levy).
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Are you between your preservation age and 60?
You’ll still pay tax on your income stream payments at your marginal tax rate, including Medicare levy, but you’ll be eligible for a 15% tax offset.
Read more about how your income payments are taxed in the Lifetime Income Product Disclosure Statement (PDS, 3.9 MB).
You can transfer money from other super funds into your UniSuper account before opening a Flexi Pension or Lifetime Income account.
Tax on transferred money only applies if the money you transfer contains an untaxed element (for example, money from a public sector super fund).
The untaxed element will be taxed at 15% when we receive it. This tax also applies to any untaxed element of a lump-sum superannuation death benefit transferred to your UniSuper account.
We recommend seeking financial advice in these circumstances before making the transfer if you are unsure.
Different taxes apply to death benefits depending on your account and the type of beneficiary you’ve chosen, so check the ‘Tax on death benefits’ section of your product disclosure statement.
For example, if your death benefit is paid to your spouse it is generally tax-free, but if it your death benefit paid to non-dependent adult children it is generally subject to tax at 17% (including the Medicare levy).
Discover more about tax and your super or pension
Chat to our retirement advice team
Our experienced retirement advisers can help answer the questions you have about tax and your UniSuper pension.
How are super contributions taxed?
Discover how your superannuation is and isn’t taxed and learn tax-friendly tips to help you save more for your retirement.
Your TFN makes tax easy
The best way to make sure you pay the right amount of tax rate is to securely provide us with your us your Tax File Number (TFN).