Question

Steve (58) receives a lump sum benefit from his super fund of $400,000. Steve’s fund is made up of 65% taxable component and he has made no previous withdrawals from super. How much tax will Steve pay on his benefit (excluding Medicare levy) this financial year?

Medicare Levy (individuals)

Individuals -Thresholds Lower income limit Upper income limit

Eligible for SAPTO $34,244    $42,805

All other taxpayers    $21,655    $27,068

Answer 1

The age of Steve is 58 years. Hence he is above the Preservation Age critera i.e. 55. Therefore Steve is eligible for entitlement to the seniors and pensioners tax offset. The taxable income of Steve is in the upper income limit category.

SAPTO stands for Senior Australians and Pensioners Tax Offset.

Hence Medicare levy upper threshold = $42805; 65% of 400000= $260000; Medicare levy = 2% of 400000 = $8000. Therefore let us consider tax to be paid by Steve equal to x. Hence x + $8000 = 65% of $ 400000 Therefore x = $252000.

Answer Steve will pay $252000 as tax on his benefit this financial year.