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Tax consequences highlighted with super withdrawals


A number of SMSF trustees are encountering surprise taxes due to misunderstanding what meeting a full condition of release means, warns a technical expert.

By Miranda Brownlee 9 minute read

SuperConcepts non-executive director Stuart Forsyth explained that he is coming across a number of SMSF trustees who have decided to pull money out of their super fund and pay it back without realising that the commissioner might consider that to be assessable income.

What often happens in these situations, he explained, is that the member needs a lump sum and so they just decide to take it.

“There can be tax consequences in that which there wouldn’t be for a pension payment, so it’s really a question of paying attention to what you’re doing,” he said.


SMSF practitioners, he said, need to be careful that their clients don’t become blinded by the regulatory issues and ignore the taxation issues.

“Regulatory issues are important, but tax is important as well,” he warned.

Often, SMSF trustees will get caught in these situations when they hit age 60, the director said.

“Some trustees think, ‘Well, I’m 60 years old, so I can take my super’. Well, it’s not quite that simple,” Mr Forsyth cautioned.

“If you’re 65, then it’s fine, but at 60, its tax-free if it’s legitimate, but it’s taxable if you haven’t met a full condition of release and you take more than 10 per cent out of a TRIS. So, there are some traps out there and some care is needed.”

Miranda Brownlee

Miranda Brownlee


Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.

Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.

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