Have you set up an SMSF and need help understanding superannuation lump sum payments? This step-by-step guide will help you, as trustee of an SMSF, to comply with the tax and superannuation laws when making a lump sum payment to a member. 

Please note, this guide does not cover:

  • Lump sums made after the death of a member. We consider this to be a specialist area – please seek advice from an SMSF Specialist Advisor.
  • Lump sum payments made from a member’s pension account.
  • Rollovers or transfers to another super fund.

What is a lump sum payment?

A superannuation lump sum payment, also referred to as a Lump Sum Benefit Withdrawal, is a payment from an SMSF in a lump sum form. This is opposed to a withdrawal paid out over a period of time, such as a Pension, super income stream or transition to retirement payment. This super lump sum withdrawal is a one-off payment from the SMSF to a member who meets the condition of release.

How to pay a lump sum from your SMSF

DISCLAIMER: This guide does not seek to provide personal advice specific to your needs, it is intended only as a guide to superannuation lump sum payments for illustrative purposes only. We encourage you to seek financial advice from an SMSF Specialist or financial advisor.

Taxable components on superannuation lump sum

WARNING – There may be penalty tax on accessing your super early.

It is important that as trustee, you are aware that members of the SMSF can only access their superannuation when they are entitled to. Any superannuation accessed early, such as superannuation lump sum payments, is included in the member’s assessable income where they are required to pay tax at their normal marginal tax rates. 

The ATO can impose additional penalties and disqualify you from being a trustee if benefits or superannuation lump sums are paid in breach of the superannuation payment standards.

 

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