Life Interests Testamentary Trusts


Retirement benefits from superannuation should be accessed in the most tax effective manner.

Consider Lyn’s case:

Lyn, who has reached preservation age, is retiring. Lyn requires $80,000 (pre-tax) per annum to maintain her lifestyle. Her current superannuation balance of $1,000,000 comprises 50% taxable component and 50% tax free component.

Transitional Pension

Lyn may commence a transitional pension up until the age of 60 and withdraw the required $80,000 per annum. The taxable component of $40,000 would be taxed at her marginal tax rates with a 15% tax offset.

Lump Sum Withdrawal

Alternatively, Lyn may elect to withdraw $80,000 per year up until age of 60 as a lump sum. Lyn has a taxable lump sum low rate lifetime limit of $205,000. As 50% of Lyn’s balance is tax free, her taxable lifetime limit would reduce by $40,000 p.a.

The tax effective option for Lyn would be lump sum withdrawal as it is entirely tax free.*

Consideration needs to be given to the taxation of income in the Self Managed Superannuation Fund (SMSF).  Previously when commencing a transitional pension in a SMSF the income in the fund was partly or fully tax free, this is no longer the case.  Recent rule changes mean income from assets supporting a Transition to Retirement Income Stream (TRIS) in a SMSF still attract the usual rates of tax.

*This is a taxation perspective only, financial advice should be sought prior to accessing superannuation.

Please contact Daley Smith, Andrew Marshall or Janine Orpwood at Langley McKimmie Chartered Accountants on (03) 5427 8100 to discuss further.

We provide accounting and wealth management services to clients in WoodendGisborne and Macedon Ranges areas within Victoria Australia. 

The content within these articles was correct at the time of writing. Please contact us for updated information and advice. 

We provide accounting and wealth management services to clients in Woodend, Gisborne and Macedon Ranges areas within Victoria Australia.

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