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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 formula

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

The variables

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