Taxation Of Benefits Examples
Taxation of Benefits for MilitarySuper Contributing Member - Proportioning at age 45
Major Roberts resigns from the Army in August 2007 aged 45, after 22 years of service. She decides to take all of her available Member benefit as cash.
This table shows a fictional member that has decided to take all of her available member benefit as cash. Her total member benefit from after-tax, MilitarySuper and DFRDB Scheme contribution totals are all displayed over the next 4 rows after the first heading row. The Preserved Employer Benefit, along with the ancillary benefit total are displayed over the next 3 rows. Lastly, her total resignation amount is stated in the last row of the table.
| Her Resignation Benefit consists of: | |
| Member Benefit of $160,000 | |
| Member's after-tax salary contributions | $60,000 |
| Taxed Interest on Member's MilitarySuper contributions | $85,000 |
| Untaxed interest on Member's DFRDB contributions | $15,000 |
| Preserved Employer Benefit of $391,000 | |
| Taxed Productivity | $41,000 |
| Intaxed balance of employer share | $350,000 |
| Ancillary Benefit of $0 | |
| TOTAL BENEFIT | $551,000 |
The only part of her benefit available as a cash lump sum is $70,000.
She is able to leave the $90,000 compulsorily preserved balance of her Member Benefit with MilitarySuper or she can transfer it to another superannuation Fund. Her Employer Benefit remains preserved with MilitarySuper.
| Lump sum benefit of $70,000 | Amount | Tax Treatment |
|---|---|---|
| Member’s after-tax salary contributions | $60,000 | Tax Free |
| Taxed Interest on Member's MilitarySuper contributions | $10,000 | 20% (ie $2000) |
| Gross Lump Sum | $70,000 | $15,000 |
| Tax payable | $2000 | $15,000 |
| NETT (before Medicare Levy is applied) | $68,000 |
| Lump sum benefit of $70,000 | |||
|---|---|---|---|
| Under the tax changes if you access part of your benefit, the payment will include both tax-free and taxable components in the same proportions as exist in your total benefit. | |||
| Member Benefit $160,000 | |||
| Member’s after-tax salary contributions | $60,000 | ||
| Taxed interest on Member’s MilitarySuper contributions | $85,000 | ||
| Untaxed interest on Member’s DFRDB contributions | $15,000 | ||
| Proportion of Tax Free/Taxed Member Benefit that is from after-tax salary contributions | ($60,000 / $145,000) x 100 = 41% | ||
| Proportion of Tax Free/Taxed Member Benefit that is from taxed interest on Member’s benefit | ($85,000 / $145,000) x 100 = 59% | ||
| Proportion of Untaxed Member Benefit that is from untaxed interest on Member’s benefit | ($15,000 / $15,000) x 100 = 100% | ||
| Proportion of lump sum payable from after tax salary contributions | 41% of $70,000 = $28,700 | ||
| Proportion of lump sum payable that is from taxed interest on Member’s benefit | 59% of $70,000 = $41,300 | ||
| Lump sum benefit of $70 000 | Amount | Tax Treatment |
| Member’s after-tax salary contributions | $28,700 | Tax-free |
| Taxed interest on Member contributions | $41,300 | 20% (ie $8260) |
| Gross Lump Sum | $70,000 | |
| Tax payable | $8260 | |
| NETT (before Medicare Levy is applied) | $61 740 |