Disability superannuation benefits

Tax treatment of lump sum benefits

A lump sum disability superannuation benefit includes an additional tax free component calculated as follows:

                                                                                          ————Days to retirement
  ——Additional tax free component  =  benefit amount  x  ———————————————————
  —— —— —— —— —— —— —— —— —— —— —— —— Service days + Days to retirement)

where:

• Days to retirement = number of days from day person stopped being capable of gainful employment to last retirement day (assumed to be 65th birthday in the absence of a specified retirement age)
• Service days = number of days in service period for the lump sum.
• Note the ATO’s view is that the denominator in this formula is equal to the number of days from the service period start date to the person’s last retirement day, ie no day is counted twice.
  

Tax treatment of income stream benefits

An income stream disability superannuation benefit is taxed as follows: