Two pools, two tax treatments
- Super (pension phase) — once you retire and start an account-based pension, earnings and withdrawals are tax-free from age 60. The catch is access: it's locked until preservation age.
- Outside super — savings, shares, ETFs you can reach any time. Dividends/distributions are taxed each year at your marginal rate, and capital growth is taxed only when you sell (with the 50% CGT discount for assets held over a year).
Why it shapes the plan
Because super earnings are tax-free, it's the best place to keep money compounding — so the planner spends outside savings first. Outside super earns its keep as the bridge that funds early retirement before super unlocks. The model taxes the outside pool properly: yearly tax on the dividend yield, and deferred, discounted CGT on growth when units are sold to fund spending.
This deferred-CGT treatment (rather than taxing the whole return as income every year) was one of the largest accuracy improvements in the model — it typically lifts the safe withdrawal rate by around a percentage point.