The tax rules differ for the two phases of super:
1. The accumulation phase, and
2. The pension (drawdown) phase.
The first phase is the accumulation phase, when money is contributed to superannuation, usually during your working years.
The pension phase begins when you start to draw down an income from your superannuation in the form of a pension.
The tax rate on earnings within a super fund in the accumulation phase is a maximum 15%. For the pension (drawdown) phase the tax rate is 0% for pension balances up an individual’s personal Transfer Balance Cap threshold (Please note: The general Transfer Balance Cap is currently set at $1.7 million for the 2021-22 financial year). Amounts over an individual’s personal Transfer Balance Cap threshold are not able to be retained within a pension account and must either be reverted back to a superannuation account in accumulation phase and be subject to 15% tax on earnings; or be withdrawn completely from the superannuation environment.
Please note: The earnings from assets supporting new and existing transition to retirement pensions (accumulation phase) are no longer subject to an earnings tax exemption. Earnings generated are now taxed up to 15%, the same as if the monies were still in accumulation stage. This taxation applies until a condition of release is met, such as reaching age 65, at which point, if retained, converts to a transition to retirement pension (in pension phase).