Taxable component

From July 1, 2007, super lump-sum and pension payouts are made up of two components: a tax-free component and a taxable component. In short, whatever is not the tax-free component is the taxable component of the payout. (See Proportioning rule)

The taxable component of a super payout is divided into:

* Taxed element in the fund. These are super savings on which tax has already been paid in the fund. This element includes earnings of a super fund that have been taxed and contributions (such as salary-sacrificed contributions) which have been taxed on entering the fund.
* The element untaxed in the fund. No tax has been paid in the hands of the fund. It includes certain super savings from unfunded public-sector super schemes that have not been subject to earnings tax. The element covers certain life insurance payouts from a fund where a deduction has been claimed for the insurance premiums.
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