Tax in Retirement: How Super and Pensions Are Generally Treated in Australia
Last updated 30 April 2026 · General information only
Tax in retirement is often simpler than people expect, but the rules depend on your age, the type of account and the source of the money.
Age 60 and over
For most Australians aged 60 and over, payments from a taxed super fund — whether a pension payment or a lump sum — are generally tax free. This is one reason retirement-phase accounts are so widely used.
Before age 60
If you access super between preservation age and 60, payments are generally taxable with an offset applying to part of the amount. The detail depends on the taxable and tax-free components of your balance.
Earnings inside the fund
In accumulation phase, fund earnings are generally taxed at a concessional rate. In retirement phase, earnings supporting an income stream are generally tax free, subject to the transfer balance cap that limits how much can be moved into that phase.
Investments outside super
Interest, dividends and rent from investments held in your own name are assessable income at your marginal rate. Franking credits can reduce the amount payable and may be refundable. Capital gains rules apply when you sell.
Offsets and thresholds
The seniors and pensioners tax offset can raise the effective tax-free threshold for eligible retirees. Whether you need to lodge a return at all depends on your total assessable income.
Thresholds and caps change regularly. Confirm the current figures with the ATO before acting.
Frequently asked questions
Do I pay tax on my account-based pension after 60?
For most people with a taxed fund, payments after 60 are tax free. Some public sector schemes are treated differently.
Do I still need to lodge a tax return?
It depends on your assessable income outside super. The ATO publishes a 'do I need to lodge' tool.
What is the transfer balance cap?
A limit on how much super you can move into retirement phase, where earnings are tax free. The cap is indexed over time.