Understanding tax in superannuation

The Macquarie Superannuation Plan prepares a tax calculation annually, based on the notional tax liability of each member. This, in aggregation and subject to certain adjustments, represents the annual tax liability of the Fund. Both the Fund and notional member calculation include consideration of certain tax benefits such as franking credits and tax-deferred amounts attributable to member accounts. 

We perform this calculation annually, after the 30 June year-end. 

• If the notional annual tax liability of a member was less than the progressive payments made throughout the year, we credit a tax refund to the member’s Cash Account. 
• If the notional annual tax liability of a member was greater than the progressive payments made, we debit a tax charge against the member’s Cash Account.

Please note: if a member exits the fund before any adjustments are applied, they won’t receive the benefit of any franking credits, foreign income tax offsets, or any revenue/capital losses that have accrued. We’ll allocate these tax benefits on a proportional basis across all active accumulation accounts at the processing date.

The Tax Calculation Summary Report provides a breakdown of tax applied within the financial year. The summary will be available online for advisers shortly after the distributed tax benefit adjustment has been applied to client accounts.

If the annual tax liability of a member is less than the tax payments made during the year, we credit a refund to the member’s Cash Account, otherwise their account is debited with a tax charge.

The tax calculations and adjustments for the period 1 July to 30 June are generally completed for clients’ super and pension accounts before March of the following calendar year. 

Resulting tax adjustments are made to your clients’ Cash Accounts and are visible in the Cash Transactions report available online.

To assist you in explaining to your clients the principles and assumptions that we have used to calculate each member’s notional tax return, we have released the:

• Online Superannuation Tax Calculation report (available as a client report)
• Guide to Member Tax Calculation.

The Guide to Member Tax Calculation is provided to you for information purposes only. No action is required from you or your clients.

Clients affected are those who held active accounts during the period 1 July to 30 June and kept their accounts open and active until the annual tax adjustment process is completed. This happens generally by March in the following calendar year.

Members who leave the Fund prior to the year's annual processing date won't receive the benefit of any franking credits, foreign income tax offsets or any revenue/capital losses that have accrued. The balance of this benefit is retained in the Fund’s reserves and may be used to cover certain fees and costs of the Fund.  

For further information, please refer to the Annual taxation adjustments section of the relevant Product Disclosure Statement.  

You can find these on Adviser Tools.

Your clients will see different adjustments on their Cash Transactions report depending on the type of account they hold. 

For superannuation clients:

• Superannuation tax calculation adjustment (credit or debit) – the total net tax position.

For pension clients:

• Distributed tax benefit adjustment – the franking credits applicable to the account.

For clients who have switched between super and pension:

• Distributed tax calculation adjustment (credit or debit) – the total net tax position in the closed super account.

The tax components of superannuation benefits must be paid in proportion to the components of the member’s superannuation interest in the fund. In the case of a: 

• Lump sum or rollover: the components will generally be determined in the same proportion as the components of the member’s superannuation interest in the fund at the time of payment.
• Income stream: the tax-free and taxable components of the superannuation interest are calculated at the time the pension commenced (or at the time of a trigger event in the case of a pension that commenced before 1 July 2007). All pension and lump sum payments are paid in these proportions.