Is withdrawing money from superannuation tax-free? For many Australians aged 60 and over, the answer is yes. But there are important exceptions.
Whether you pay tax when withdrawing super depends on your age, the type of super fund, the components of your benefit and how you receive the money.
Understanding these rules before withdrawing funds can help you make informed decisions about retirement income, tax and your longer-term financial position.
When can you withdraw your super?
Superannuation is generally preserved until you meet a condition of release.
Common ways to access super include:
- Reaching age 60 and retiring under the relevant rules.
- Ceasing an employment arrangement after turning 60, which may release certain accumulated benefits.
- Reaching age 65, whether you are still working or not.
- Starting a transition-to-retirement income stream once eligible, subject to withdrawal restrictions.
- Meeting an eligible early-release condition, such as certain cases of severe financial hardship, compassionate grounds or permanent incapacity.
Being eligible to withdraw super does not automatically mean the payment is tax-free.
First establish whether you can legally access your benefit. Then check how the payment will be taxed.
Is super tax-free after age 60?
For most Australians, super withdrawals received from a taxed superannuation fund after turning 60 are tax-free.
This generally applies whether you receive the benefit as a lump sum or as payments from an account-based pension.
Most Australian super funds are taxed funds, meaning relevant contributions and investment earnings have been subject to tax within the superannuation system.
Different rules may apply if your benefit includes an untaxed element, such as from certain public sector super schemes, or if you receive a capped defined benefit income stream.
Helen is 63, has met a condition of release and withdraws $80,000 from a taxed superannuation fund.
Assuming the payment is an ordinary member benefit and contains no untaxed element, the withdrawal is generally tax-free.
The $80,000 is not normally included in Helen's assessable income.
How is super taxed if you are under 60?
Withdrawals before age 60 may be subject to tax, even where you are legally entitled to access your super.
The amount depends on your age, the taxable and tax-free components of the payment, and whether the taxable component has already been taxed within the fund.
Preservation age is now 60 for people born on or after 1 July 1964. People born earlier may have a lower preservation age under the historical rules.
In the 2026–27 financial year, the low rate cap for eligible super lump sums is $260,000.
The cap may allow eligible taxable components from taxed funds to receive a zero rate of tax where a member has reached preservation age but is under 60.
The low rate cap is a lifetime threshold that is reduced by amounts previously counted against it.
It applies under specific rules to eligible lump sum benefits. Untaxed elements and payments made before preservation age can receive different treatment.
How super withdrawals are generally taxed
The table below provides an overview for ordinary member benefits.
| Your circumstances | General tax treatment |
|---|---|
| Age 60 or over, withdrawal from a taxed fund | Generally tax-free for ordinary lump sums and account-based pension payments. |
| Preservation age reached but under 60, eligible taxed lump sum | Taxable component may receive a zero rate up to the remaining low rate cap. Tax may apply above that amount. |
| Under preservation age, legally released taxable lump sum | The taxable component may be subject to tax. Different treatment applies to the tax-free component. |
| Withdrawal containing an untaxed element | Special tax rules may apply, including after age 60. |
| Certain defined benefit pensions | Additional tax rules and thresholds may apply to pension payments. |
Super withdrawal tax: A simple decision guide
These questions can help you identify which tax rules are likely to matter before requesting a withdrawal.
Start by confirming that you have met a valid condition of release.
Age 60 or over
Is your payment an ordinary member benefit from a taxed fund?
Generally tax-freeUnder age 60
The tax treatment depends on your preservation age and the components of your benefit.
Tax assessment neededUntaxed fund benefit
Special tax rules may apply regardless of whether you have turned 60.
Check untaxed elementDefined benefit pension
Different rules can apply, including the defined benefit income cap.
Check pension rulesThis is a general guide. Death benefits, early-release payments, disability benefits and other special circumstances may be treated differently.
What are the taxable and tax-free components of super?
Your super benefit can contain different components for tax purposes.
Tax-free component
Generally includes certain personal contributions for which no tax deduction was claimed and other amounts classified as tax-free under superannuation rules.
Taxable component
Includes the remaining balance of the super benefit. It may contain a taxed element, an untaxed element or both.
The tax-free component of an ordinary super member benefit is generally received tax-free.
The taxable component may also be tax-free after age 60 if it has already been taxed within the fund.
A withdrawal normally includes taxable and tax-free components in the same proportions as the relevant superannuation interest.
Assume a super interest is made up of 25% tax-free component and 75% taxable component.
A $100,000 lump sum would generally comprise $25,000 tax-free component and $75,000 taxable component.
The tax treatment of the $75,000 depends on the member's age, the type of fund and whether it is a taxed or untaxed element.
What is the difference between a lump sum and a pension?
Once eligible to access your super, you may be able to withdraw some or all of it as a lump sum, commence a retirement income stream or combine the two approaches.
Lump sum withdrawals
A lump sum is a payment taken directly from your super balance. It may be used for purposes such as paying down debt, covering major expenses or holding money outside the superannuation system.
Taking a lump sum reduces the amount remaining in super and may affect future investment earnings.
Account-based pensions
An account-based pension pays income from your super over time.
For people aged 60 and over, payments from a taxed account-based pension are generally tax-free.
Pension accounts are subject to minimum annual withdrawal requirements. Other rules, including the transfer balance cap, can affect how much super can be moved into retirement phase.
Transition-to-retirement income streams
A transition-to-retirement arrangement may allow eligible people to draw limited income from super while continuing to work.
These arrangements have their own access and payment restrictions. Their tax treatment depends on the member's circumstances.
Can withdrawing super affect your Age Pension?
Even when a super withdrawal is tax-free, it can affect your wider financial position.
Centrelink may assess superannuation and assets held outside super differently depending on your age and circumstances.
Moving money from super into a bank account, investment or another asset can affect how the assets and income tests apply.
Before withdrawing a large amount, consider how the decision could affect Age Pension eligibility or other income support payments.
Should you withdraw super to pay off your mortgage?
Paying down a mortgage may reduce interest costs and provide greater certainty about your regular expenses.
The trade-off is that money withdrawn from super may no longer benefit from the tax treatment and investment opportunities available within the superannuation system.
The right approach depends on your mortgage balance, interest rate, expected retirement income, other assets and spending needs.
A couple aged 64 and 62 is considering withdrawing $120,000 from super to reduce their home loan.
Assuming both have met the relevant conditions of release and their benefits come from taxed funds, the withdrawals may be tax-free.
But the decision should also consider how much retirement income they need, the interest saved on the mortgage and the impact on their remaining super balance.
What if you have an SMSF or defined benefit fund?
Members of self-managed super funds and defined benefit schemes should pay particular attention to the type of benefit being withdrawn.
A complying SMSF is generally a taxed fund, but withdrawals still need to satisfy the relevant superannuation rules.
Defined benefit schemes may have additional tax provisions, particularly where benefits include untaxed elements or capped defined benefit income streams.
Members should obtain details of their benefit components before assuming that all payments will be tax-free.
What should you check before withdrawing super?
A withdrawal decision should consider more than the immediate tax treatment.
- Confirm you have met a valid condition of release.
- Check whether your fund is a taxed or untaxed fund.
- Request a breakdown of your taxable and tax-free components.
- Understand whether the payment will be a lump sum or income stream.
- Consider any defined benefit or SMSF requirements.
- Review the impact on your retirement income and investments.
- Consider Age Pension and other income support implications.
- Check whether tax advice or financial planning advice is needed before withdrawing.
Frequently asked questions
Do I pay tax if I withdraw super after age 60?
Withdrawals from taxed super funds are generally tax-free for members aged 60 or over. Exceptions may apply to untaxed elements and certain defined benefit pensions.
Can I withdraw super at age 60 if I am still working?
Turning 60 does not automatically provide unrestricted access to every super benefit. You may qualify after ceasing an employment arrangement or meeting another condition of release. A transition-to-retirement income stream may also be available.
Is a super lump sum counted as taxable income?
An ordinary tax-free super lump sum is generally not included in assessable income. Taxable amounts may need to be reported depending on your age and benefit components.
Is an account-based pension tax-free?
Payments from a taxed account-based pension are generally tax-free from age 60. Different rules may apply to other types of income streams.
Can I withdraw only the tax-free component of my super?
You generally cannot choose to withdraw only the tax-free component from a super interest. The proportioning rules normally require the withdrawal to reflect the taxable and tax-free components of that interest.
Will withdrawing super affect my Age Pension?
It can. Centrelink assesses assets and income under rules that depend on your circumstances. Consider the effect before moving large amounts out of super.
Make your withdrawal decision part of your retirement plan
The tax treatment of a super withdrawal is important, but it is only one part of the decision.
How much you withdraw, when you withdraw it and what you do with the money can affect your retirement income for years to come.
Before taking a large lump sum or starting a pension, consider how the decision fits with your income needs, other assets, tax position and estate planning.
Planning to access your super?
An RJS Wealth Management Strategic Planner can help you explore your retirement income options, understand the implications of withdrawing super and plan around your financial goals.
Speak with an RJS Strategic Wealth PlannerSources and further reading
ASIC Moneysmart: Getting your super
ASIC Moneysmart: Tax and super
Information current as at October 2026.
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