Making every contribution count.
Learn how contribution years and current PNG legislation determine the tax payable when you withdraw your superannuation.
Understanding Withdrawal Tax
Understanding how withdrawal tax is calculated can help you make informed decisions about your superannuation.
The tax payable when you withdraw your super depends on the number of contribution years you have accumulated, as determined under current Papua New Guinea legislation.
How contribution years are calculated
Contribution years are calculated by financial year, rather than the exact number of months you have contributed.
For example, if your first contribution is made on 31 December, this is recognised as your first contribution year. From 1 January of the following year, you commence your second contribution year.
Withdrawal tax rates
The following tax rates apply based on your contribution history.
| Years of Contributions | Applicable Tax Rate |
|---|---|
| Less than 5 years | Marginal tax rate (currently up to 42%) |
| 5 years to less than 9 years | 15% |
| 9 years to less than 15 years | 8% |
| 15 years or more | 0% |
A 0% withdrawal tax rate may also apply where a member has contributed for more than seven years and is aged 50 or over, or where benefits are paid due to death, permanent disablement or redundancy.
Understanding contribution years
Because contribution years are based on financial years, the timing of a withdrawal may affect the tax rate that applies.
The example below illustrates how contribution years are calculated under the current legislation.
Example
A member commences contributing to PacSuper in 2025 and completes a three year employment contract in 2028.
Under the current legislation, members under the age of 60 are generally required to wait 12 months after leaving employment before withdrawing their superannuation benefits.
If the member withdraws their benefit in 2029, they will be recognised as having completed five contribution years. Under the current withdrawal tax schedule, this means the applicable tax rate would reduce from the member’s marginal tax rate (currently up to 42%) to 15%.
This example is provided for illustrative purposes only and is intended to explain how contribution years are calculated under the current legislation.
Salary Packaging and Investment Choice
Salary packaging superannuation contributions may provide tax advantages for eligible members under current Papua New Guinea legislation.
Depending on a member’s contribution history and individual circumstances, the tax payable on superannuation benefits may reduce from the applicable marginal tax rate (currently up to 42%) to as low as 0%.
Members may also choose to invest in the Australian Dollar (AUD) Portfolio, providing exposure to a foreign currency and helping diversify retirement savings. For some members, this may also assist in reducing exposure to movements in the Papua New Guinea Kina.
Important Information
This information is provided as general information only and is intended to explain how withdrawal tax is calculated under current Papua New Guinea legislation. It does not constitute financial or taxation advice and does not take into account your personal circumstances. Members should consider seeking professional advice appropriate to their individual circumstances before making financial or taxation decisions.