Illustration of Crystallisation

5 May 2008

Example 1 –  Member’s superannuation interest as at 1 July 2007

Member has a superannuation interest valued at 30 June 2007 of $100,000 with no pre 1 July 1983 service and has $5,000 of undeducted contributions.

Notional ETP Components at 30 June 2007 are:

  • $5,000 undeducted contributions
  • $95,000 post 30 June 1983 component

The crystallised segment is $5,000.  The taxable component is $95,000.

Example 2 – member makes contributions during 2007/08

The member contributes $8,000 as non-concessional contributions during 2007/08.  Additionally, net earnings and net concessional contributions in total of $40,000 accrue during 2007/08.

The member’s superannuation interest as at 30 June 2008 will be $148,000, which will consist of:

  • $13,000 tax free (ie being $5,000 crystallised component and $8,000 non-concessional contributions) which is 8.78%
  • $135,000 taxable component (ie the value of the superannuation interest less the taxable component) which is 91.22%

Example 3  - member withdraws $50,000 on 1 July 2008

Continuing on from Example 2, the member on 1 July 2008 withdraws a $50,000 lump sum super benefit.  After the withdrawal the superannuation interest will be $98,000.

Because of the proportioning rule, the $50,000 benefit will consist of tax free (ie tax exempt) and taxable components in the same proportion as applied to the superannuation interest immediately before the payment of the benefit.

Consequently, the $50,000 benefit will consist of:

  • $4,390 tax free component (tax exempt), ie 8.78% of $50,000
  • $45,610 taxable component, ie. 91.22% of $50,000

The superannuation interest of $98,000 will now consist of:

  • $8,604  tax free (tax exempt), ie. 8.78% of 98,000
  • $89,396  taxable component, 91.22% of $98,000
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