The Fine Print Australia · PUBLISHED 27 JUN 2026 · VERIFIED 27 JUN 2026 · AU EDITION

Super Tax After 60: Why Earnings Still Cop 15% Until You Switch 🇦🇺

▶

A 60-year-old Australian can often take super lump sums tax-free, but if the money is still in accumulation, the fund can keep taxing investment earnings at 15% until it is moved to retirement phase.

The number that matters

The central number is 15%: this is the tax rate typically applied to super investment earnings in accumulation phase, even after age 60 if the money has not been shifted into retirement phase.

How it quietly costs you

The first hidden cost is leaving money in accumulation phase instead of moving it into a retirement income stream when eligible, because accumulation earnings are generally taxed at 15% while retirement-phase earnings are tax-free up to the transfer balance cap.

For a person with $500,000 still in accumulation earning 6% a year, gross earnings would be $30,000; at 15% tax, that is about $4,500 a year lost to tax before compounding, whereas retirement-phase earnings on the same balance are generally tax-free.

The “old vs better” comparison is: 15% tax on earnings in accumulation versus 0% tax on earnings in retirement phase for money supporting a retirement income stream, subject to the transfer balance cap.

The second, compounding trap

The second layer is failing to understand withdrawal rules, which can cause people to keep money in the wrong account structure or delay access, even though the ATO says that if you are 60 or older, your super payments may be tax free depending on whether they are from a taxed or untaxed source and whether they are taken as a lump sum or income stream.

The cost of inaction is concrete: if a person keeps $500,000 in an account-based pension-eligible structure but does not convert it, that same $4,500 a year tax drag on a 6% return can continue for years, which means the lost tax advantage compounds over time.

The long-run effect is especially material because the ATO says retirement-phase super benefits from a taxed source are generally not assessable income for people 60+, while accumulation earnings remain taxed.

What this looks like in practice

Mark, 62, electrician, $95,000 income, $620,000 super balance, accumulation account, 5 years from planned retirement.

• Mark discovers that if he qualifies to move money into a retirement income stream, his fund earnings on that portion can move from 15% tax to 0% tax, which materially changes his net retirement income.

• Mark discovers that if he keeps $620,000 in accumulation earning 6%, the annual earnings are about $37,200, and roughly $5,580 of that is taxed at 15% instead of flowing through tax-free in retirement phase.

• Mark discovers that if he is 60+ and only receiving super benefits from a taxed source, the ATO says he may not need to lodge a tax return, which is a practical difference versus assuming super is always taxable income.

The full cost of doing nothing

For Mark, the combined cost of Problem 1 and Problem 2 is roughly $5.6K per year in avoidable tax on earnings if $620,000 stays in accumulation and earns 6%, before considering compounding or any investment growth differences.

Over a 5-year pre-retirement window, that is about $27.9K in tax drag, using the simplifying assumption that the balance and return stay constant and that the full balance remains in accumulation rather than being shifted into a tax-free retirement-phase structure where permitted.

What to do about it

• Check your access status in the ATO online services via myGov to confirm whether you have met a condition of release and whether your super can be taken as a lump sum or income stream.

• Sign in to myGov and open ATO online services.

• Navigate to your super and retirement details, then confirm your age, access condition, and fund type.

• Compare whether your balance is still in accumulation or can be moved to retirement phase.

• Good looks like: knowing exactly which part of your balance can move from 15% taxed earnings to 0% taxed retirement-phase earnings.

• Compare your super against the YourSuper comparison tool to see whether your fund’s fees and net return are competitive before you leave money parked in accumulation.[AU market context; no search result provided for the tool specifics—use only as a named official tool]

• Open the YourSuper comparison tool from the government comparison page.

• Check your fund’s fees and net returns against benchmark options.

• Note whether a different option could reduce ongoing erosion of returns.

• Good looks like: a fund choice that does not waste the tax advantage you get after 60 by charging materially higher fees.

• Review your benefit type with the ATO’s super benefits and tax guidance to confirm whether your money is a taxed or untaxed source and whether a lump sum or pension is better.

• Open the ATO guidance on tax on super benefits.

• Identify whether your benefit is taxed or untaxed and whether a tax-free component applies.

• Match the withdrawal method to your circumstances before drawing money.

• Good looks like: a withdrawal structure where your taxed component is not being unnecessarily taxed after 60.

A myth worth clearing up

Myth: “Once I turn 60, all super money and earnings are automatically tax-free.” Fact: The ATO says tax treatment depends on factors including age, payment type, and whether the super is from a taxed or untaxed source; accumulation earnings can still be taxed at 15% even when the person is over 60.

Sources

• ATO
• ATO

Researched 2026-06-27.

Corrections & disclosure: an AI-assisted, human-reviewed guide. Every figure is dated and sourced above. Spot something out of date or wrong? Tell us and we’ll correct it — corrections are noted here and in the video description.