Took redundancy 12Mths ago, have now reached my preservation age, looking to a Lump Sum Super withdraw from my accumulation account. I understand the tax free & taxed component (which has no untaxed element).which for 2019 tax there is $205k low cap threshold and I have no super withdraws. Now I intend draw Tax free & Taxable components to wipe out all the $205k low cap limit threshold. Myself 57 & wife 52yr are not now working, are self-supporting not claiming any government centre link payment, living from savings, and only income is from interest, dividends and imputation credit, both of us taxable income just over the $18,200 tax free margin bracket.
ATO tax site, to me is not quite sure, or completly clear on my reading so questing to confirm advise on re the Lump Sum super withdrawal tax implication as discussed above.
Yeah thanks mate, have read many time's, yet still not quite 100%,and still scratching with issue below ?
Income for surcharge purposes includes:
If you are between your preservation age and 59 years old, you subtract from the total (above) any taxed element of a super lump sum (other than a death benefit) which you received that does not exceed your low-rate cap.
Your family income for surcharge purposes is the combination of your income and that of your spouse, using the above mentioned criteria.
So to me, the actual withdrawn Super lump taxable amount up to the low cap rate, while is shown in taxable income, but for calculations of rebate purpose, is taken back out (subtracted). So in essence the withdrawn lump sum taxable component from the "low cap rate" will not be detrimental to the Private hospital cover rebate.
I believe or at least think I understand rest of my questions re below:
Hope if you will confirm my my interpertation
I don't have any answers for you but I can understand your questions, so maybe I can explain the questions in a different way so we can both be informed.
In my opinion, the detail and explanation of the lump sum tax (as the link above directed) is not clear for those who reach the withdrawal age but not yet 60.
There is a $205k lifetime cap (indexed) where taxed amounts withdrawn are reduced tax. Say I withdraw $200k.
These are the questions I don't have answers for:
The amount of $200k has to be added to the tax return but there isn't anywhere to reduce the taxable income with this lifetime cap, so my taxable income in that year will be $200k. How do I then have nil tax if my taxable income is $200k but reduced by the cap?
How is the medicare levy applied in this instance? How is the high income levy applied? How does this affect my health benefit? How does it affect Centrelink, Family Payments, Child Care Subsidy, Child Support, now that my taxable income for this year is $200k? etc, etc.
I hope someone in the community can explain...