The formula method is complex. We recommend getting advice from a tax agent to use it.
With the formula method you are taxed on the actual gains of your foreign superannuation interest. This tax is between when your 4-year exemption (if any) expires and the date you receive the lump sum.
The formula method cannot be used for:
- transfers from defined benefit schemes
- schemes where the total interests are below $50,000.
The equation for working out your assessable income under this method is:
gain x (grow rate - 1) x tax rate x (assessable years - 1) + gain
|gain||(super withdrawal x calculated gains fraction) - other gains|
|grow rate||(accrued total ÷ value) to the power of (1 ÷ assessable years)|
|assessable years||The number of income years from the beginning of the assessable period until the withdrawal takes place. If the number of income years is less than 1 then the number of assessable years to use is 1.|
|tax rate||the highest prescribed investor rate|
|accrued total||the value of the scheme immediately before the withdrawal, plus any previous withdrawals during the assessable period, less any recognised contributions during the assessable period|
|super withdrawal||the amount of the foreign superannuation withdrawal|
|other gains||the total amount of gains (as defined above) for previous withdrawals in the assessable period|
|calculated gains fraction||(predistribution + withdrawals - value - contributions) ÷ predistribution
If the formula gives a result that is less than zero then the calculated gains fraction is zero.
|predistribution||the value of the person's scheme immediately before they made their foreign superannuation withdrawal|
|withdrawals||the total amount of previous foreign superannuation withdrawals made in the assessable period|
|value||the opening value of the person's scheme at the beginning of their assessable period|
|contributions||the total amount of recognised contributions before the foreign superannuation withdrawal|