Carmen is age 62 and is considering retiring permanently from the workforce however she is concerned that she may become bored in retirement. She has come in to discuss issues around taking a pension from her superannuation account which is currently in accumulation phase.

She has sought your advice regarding some superannuation issues she is unsure about.

Answer Carmen's queries in a way that will be both clear to her and also comprehensive.

Questions:

If Carmen commences a transition to retirement (TTR) income stream (pension) on 1st August 2020 and she continues to work, explain how the earnings on her superannuation investments will be taxed.

Explain to Carmen how the tax treatment of her super investments will be different if she retires permanently from the workforce and then commences a retirement phase income stream (pension).

Carmen has now decided to continue working and commence a transition to retirement (TTR) income stream (pension). At what stage will Carmen have a transfer balance account with the ATO?

Explain to Carmen, in detail, the difference between the tax-free component of her super and the taxable component of her super. Note that the taxable component comes from a taxed fund. You should mention what is included in each of the components.

If Carmen was able to withdraw money from her super fund, explain how each component would be treated from a tax perspective.