Your tax guide to accessing your super over age 60

In this guide

Getting your super benefit: Meet a condition of release
Payments from taxed funds
Payments from untaxed funds
Tax time: Here’s what you need to know about your tax return

When it comes to super, reaching age 60 triggers an important change. It means you can withdraw your super benefits more easily and, for most people, they are tax free.

This represents a big change from your tax position if you withdraw your benefits before age 60, when some tax is usually payable on part of your super benefit.

Learn about tax and accessing super before age 60 and the different rules that apply to temporary residents who access their super after leaving Australia.

To help you understand a complex and confusing area of super, SuperGuide has put together an overview of the rules for withdrawing your benefits on or after your 60^th birthday.

Getting your super benefit: Meet a condition of release

There are strict rules governing your ability to access your super savings, as the super system is designed to provide you with income in your retirement.

Once you reach age 60 it’s more straightforward, but you still need to meet a condition of release. At this age, common conditions of release include retirement or starting a transition-to-retirement pension.

Need to know

You can access your super when you reach age 65 even if you have not retired, as reaching this age is considered a condition of release. This allows you to access your benefit, which can be paid as either a super pension or a lump sum.

Learn more about all conditions of release.

Super tip

If you are currently receiving any payments from Centrelink, it’s a good idea to check before you access your super benefit as it may affect your entitlements.

To find out more, contact Centrelink on the 13 23 00 Older Australians line, or go through the Services Australia website.

When you meet a condition of release and apply to access your super, you can usually choose to withdraw a lump sum, an income stream or a combination of both. If you’re using the transition-to-retirement condition of release, the only option is an income stream. You may also leave money in your original super account after retirement if you wish.

1. Withdrawing a lump sum

This is a single payment that withdraws some or all of your super. Taking a lump sum means the money is no longer within the super system so, if you invest it, any return on your investment will not be taxed as super savings.

This means the concessional tax rate of 15% on your investment earnings will no longer apply. Instead, your investment earnings outside super are taxed at your marginal tax rate, which can be as high as 45% (plus the Medicare levy).

2. Starting an income stream (super pension or annuity)

If you decide to take an income stream, you receive a series of regular payments from your super fund. These must be paid at least annually and must meet minimum annual payment rules. Investment earnings in super income streams are tax free, except in a transition-to-retirement pension where earnings are taxed at 15% until you retire or reach age 65.

Read more about your super options on retirement.

Need to know

When choosing whether to take a lump sum or income stream from your super account, consider getting professional advice from an independent financial adviser or tax professional.

Tax and super can be complicated, so withdrawing all your savings as a lump sum may not necessarily be the best strategy for you, as there can be tax advantages with establishing a retirement income stream.

Payments from taxed funds

Most people are members of taxed super funds. These funds pay tax on contributions and investment earnings. You don’t pay tax on withdrawals from these funds after you turn 60, except in the situations explained below:

1. Income from a capped defined benefit income stream

If you receive income from capped defined benefit income streams above the defined benefit income cap ($118,750 in 2024–25) you will need to declare some income on your tax return. The amount to declare is 50% of the portion of your annual payment that is above the cap. This amount will be taxed at your marginal tax rate.

A capped defined benefit income stream is:

Any lifetime superannuation pension
A lifetime annuity that existed prior to 1 July 2017
A life expectancy pension or annuity that commenced prior to 1 July 2017
A market-linked pension or annuity that existed prior to 1 July 2017

You may be the original recipient of the income stream, or you may be receiving it after the death of the original owner. Despite the name, many of these income streams are not defined benefits.

2. Lump sum death benefits paid to you when you were not a tax dependant of the deceased person

Tax dependants are:

A spouse or former spouse (married or de-facto)
A child under 18
A person in an interdependency relationship with the deceased
Any other person financially dependent on the deceased.

If a person close to you has died and left you their superannuation from a taxed fund, you will pay a maximum rate of 15% tax plus Medicare levy on the amount if you do not fall into one of the dependant categories.

Payments from untaxed funds

A small number of public sector funds (funds for government employees) are untaxed, meaning they don’t pay tax on contributions or investment earnings. Examples include Triple S in South Australia and West State Super in WA. Payments from these funds have an untaxed element that is taxed at higher rates to compensate for the fact no tax was deducted when the money was accumulating.

Any after-tax contributions you have made to one of these funds forms a tax-free element that is returned to you without tax. You may also have a taxed portion if you have rolled money over from a taxed fund and this is also returned to you tax free after age 60.

The table below shows tax on the untaxed element for different types of payments after the age of 60. Note that the Medicare levy applies in addition to these amounts, and these are the maximum rates of tax. If your marginal rate is lower, the ATO will adjust tax down to your marginal rate.

Type of benefit	Maximum rate of tax
Lump sum	15% up to untaxed plan cap 45% above the untaxed plan cap
Terminal illness lump sum	Tax free
Income stream	Marginal rate with 10% offset*
Death benefit lump sum when you are a tax dependant	Tax free
Death benefit lump sum when you are not a tax dependant	30%
Death benefit income stream	Marginal rates less 10% offset*

The untaxed plan cap is $1.78 million in 2024-25

*Maximum tax offset is $11,875 for the 2024–25 income year. This has the effect that income from untaxed elements above the defined benefit income cap of $118,750 does not attract the offset

Tax time: Here’s what you need to know about your tax return

If you have received a lump sum or income stream from a taxed fund after age 60 you do not need to include anything on your tax return unless it is a capped defined benefit income stream, or it is a death benefit and you are not a tax dependant of the deceased.

If you have received amounts from an untaxed fund, you will need to complete the details at the labels for superannuation lump sums and/or superannuation income streams. Any tax offset you are entitled to from an income stream must be added separately in the tax offsets section of your return. If the amount is a terminal illness lump sum or death benefit lump sum and you are a tax dependant of the deceased, you do not need to include anything on your tax return as these amounts are tax free.

Case study 1: Payment from a taxed fund

Patrick is aged 62 and receives $80,000 a year in regular pension payments from his taxed super fund. He also works two days a week as a consultant for a legal practice and will earn $18,000 in non-super income during the financial year.

As the $80,000 is from an account-based pension paid by a taxed super fund, all of Patrick’s super pension payments are tax free and don’t need to be reported in his annual income tax return.

The $18,000 in employment income he earns during the year will be below the threshold for paying income tax, so Patrick’s tax bill for the year will be zero.

Case study 2: Payment from an untaxed fund

Josephine is 62 and a member of an untaxed fund. Her whole retirement balance of $890,000 is made up of untaxed element. She decides to take a lump sum of $150,000 to repay her mortgage and uses the remainder of her balance to start a pension paying $44,000 per year.

Josephine’s fund deducts $25,500 in tax from her lump sum of $150,000 representing total tax of 17% (15% + 2% Medicare levy). This leaves $124,500 for Josephine to repay her debt after the deduction of tax.

Josephine’s annual pension of $44,000 will attract tax at marginal rates with a 10% tax offset.

If she chose, Josephine could instead transfer her balance to a taxed super fund before making any cash withdrawals. In this case, the fund receiving the transfer would deduct 15% tax when the funds arrived, and Josephine’s balance would be converted to taxed element which she could withdraw tax free. This may result in less tax overall for Josephine, depending on her full circumstances.

If the amount transferred to a taxed fund is above the untaxed plan cap, the original fund will withhold 47% tax from the excess amount before transferring the benefit. The net amount remaining above the cap after the deduction of tax will form a tax-free component in the new fund.