Question

Mary has $400,000 in her superannuation fund made up of a tax-free component of $200,000 and a taxable component of $200,000. Mary, who is 60, retires and receives a superannuation lump sum of the full amount. How much tax is Mary liable for?

		Nil
		Her marginal tax rate on $200,000
		15% on $200,000
		15% on $400,000

Answer 1

As the Superannuation fund ($ 400,000) of Mary made-up of a tax-free component of $ 200,000, only the remaining $ 200,000 is taxable. Taxability on Superannuation arises when it is being received. Since Mary, retires and receives the amount ($ 400,000) the taxability arises, but only on $ 200,000 which is taxable. Hence 15% tax on $ 200,000 shall be the taxable amount, which is equal to $ 30,000.