How pensions are taxed

With Media Super, you pay no tax on the investment earnings of your pension, however there may be other taxes applicable. The tax applied to your pension depends on your age.

Under Age 60

Your pension balance is made up of two components - the taxable component and the tax-free component. As their names suggest, the taxable component attracts tax, while the tax-free component doesn't. The amount of tax applied to the taxable component depends on your age.

The proportion of these two components is calculated when you start your pension. This fixed proportion then applies to each payment you receive.

If you are under 60, taxes will apply to pension income payments and lump sum withdrawals but investment earnings are tax-free.

Age 60 or more

If you are aged 60 years or more, any income, additional payments and investment returns from your pension are entirely tax free.

tax on investment earnings

Investment earnings on pension accounts do not attract tax, regardless of your age.

Tax on commencement

If any part of the superannuation you use to start your pension consists of an untaxed rollover amount (previously a post-June 1983 untaxed element), this portion will be taxed at 15%. Generally, this is only applicable if you are transferring from an untaxed super fund. For most members, tax has already been deducted by their super fund, so this tax will not be applicable.

Superannuation surcharge tax

The superannuation surcharge tax was abolished from 1 July 2005; however, the surcharge may still be payable for periods before this date.

If the ATO assesses that you are liable to pay a superannuation surcharge, you will be required to pay this directly. If you need to withdraw additional funds from your pension to pay the surcharge, that withdrawal will be tax-free.


Important note: different rules may apply to your pension if it was established before 1 July 2007. If you have a pension established before this date, contact your fund for details.