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Because the Australian taxation system is complex and different members have different circumstances, you should consider seeking professional taxation advice.

Some tax information about pensions has been provided for you on this page. However, although every care is taken, it is never possible to rule out the risk that tax laws may change and taxation liabilities of the fund could be increased or the benefit of concessions reduced. This tax information is current as at 1 July 2007. The levels and basis of tax may change in the future.

What tax is payable?

How you are taxed on your allocated pension and term allocated pension payments will depend on your age, when you commenced your pension and when you receive the payment. See the table below for details:

Pension age for women

Date of birth Qualifying age for Age Pension

Before 01/07/1935 60.0 01/07/1935 to 31/12/1936 60.5 01/01/1937 to 30/06/1938 61.0 01/07/1938 to 31/12/1939 61.5 01/01/1940 to 30/06/1941 62.0 01/07/1941 to 31/12/1942 62.5 01/01/1943 to 30/06/1944 63.0 01/07/1944 to 31/12/1945 63.5 01/01/1946 to 30/06/1947 64.0 01/07/1947 to 31/12/1948 64.5 01/01/1949 and later 65.0

Pension type Assets Test Income Test

Term allocated pension 50% of account value Income less annual exempt amount Allocated pension Account value Income less annual

exempt amount

Current age

55 to 59 60+

The whole amount of the pension is excluded from your assessable income and is not subject to tax. Amount of pension less an annual

tax-free amountis included in your assessable income and taxed at your marginal rate. A tax offset of 15% is available to reduce your tax payable.

For pensions commenced prior to 1 July 2007

Your tax-free amount is the deductible amount and was calculated by dividing your undeducted purchase price by your life expectancy at commencement. Your undeducted purchase price was the sum of any undeducted contributions, post-June 1994 invalidity component and CGT-exempt component in the purchase price.

The tax-free amount will not change until one of the following trigger events occurs:

W _{you turn 60}

W _{you take a full or partial commutation, or} W _{you die.}

From this time, your existing tax components will convert to the new components as follows:

W _{taxable component – previously the post-1983 component}

and non-qualifying components

W _{tax-free component – previously the pre-1983, undeducted,}

CGT-exempt, post-June 1994 invalidity and concessional components combined.

Tax-free amount

For pensions commenced after 1 July 2007, the tax-free amount will be calculated based on the proportion of the components used to purchase the pension or at the time of a trigger event. For example, if your pension commences with a $30,000 tax-free component and $70,000 taxable component, your tax-free amount in each pension payment will be 30%.

If you commence your pension prior to 1 July 2007 and subsequently roll over or take a withdrawal (partial or full commutation) from your pension between age 55 and 59, the amount of tax-free pension you receive could change. Please see your financial adviser for more information.

Payments net of tax

Where required, PAYG tax will be withheld from your pension payments and remitted to the ATO on your behalf. Generally, any difference between your nominated pension amount and the amount you receive represents the income tax we have deducted. On the application form, you can nominate the pension to be paid as either an amount before tax (gross) or an amount after tax (net).

Please see below for information on the taxation of pensions paid on death.

What happens if you die?

Estate planning is an important part of your self managed superannuation fund as this will direct your superannuation or pension assets after you die. You can make a binding death nomination, or additionally you can choose a reversionary beneficiary or a nominated beneficiary. This area is complex, and your nomination(s) can affect the tax concessions on your pension payments. We recommend you seek independent financial advice.

Binding death nomination

To provide greater certainty on who receives your benefit when you die, you can make a nomination which binds the trustee to pay your death benefit to certain beneficiaries whom you direct (providing you are over the age of 18 when you make the nomination and you are still a member of your fund when you die). You can request the trustee(s) to pay the benefit either as an income stream, a lump sum or a combination of both. The Binding Death Nomination form, which includes details on who can be nominated, is available online.

Nominated beneficiary (non-binding)

You can nominate a beneficiary in writing. This will be used as a guide as to who your dependants are, but is not binding on the trustee.

Reversionary beneficiary

You can nominate a reversionary beneficiary in writing who will automatically receive your pension if you die. You can choose only one reversionary beneficiary.

If you change the reversionary beneficiary, you must notify us, at which time we need to recalculate some pension components. For a term allocated pension, a reversionary beneficiary must only be your spouse or de facto spouse. Nominating a reversionary beneficiary will impact your beneficiary’s ability to commute your term allocated pension on your death.

Please note: From 1 July 2007, a death benefit can only be paid as an income stream to your child if they:

W _{are under age 18}

W _{are under age 25 and financially dependent on you, or} W _{have a certain type of disability.}

If your child’s circumstances change and they don’t meet the above requirements, we are required to pay your benefits to them as a lump sum payment.

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26 Colonial First State YourChoice Self Managed Super