Two pools, two tax treatments
| Super (pension phase) | Outside super | |
|---|---|---|
| Tax on earnings | Tax-free from age 60 | Dividends/distributions taxed each year at your marginal rate |
| Tax on capital gains | None in pension phase | Taxed on sale (50% discount if held 12+ months) |
| Access | Locked until preservation age | Any time |
| Best used for | Long-term tax-free compounding | The early-retirement bridge before super unlocks |
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.