Superannuation Pension or Annuity Tax Offset

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SIS LEGISLATION

SIS ACT 1993

SIS REGULATIONS 1994

Not refundable. These offsets can be used to reduce tax payable, but are not refundable, nor are they available to offset the Medicare levy.

Post 1 July 2007

Under Age 55

A tax offset of 15% applies to the taxed element of the taxable component only if the payment is a disability superannuation benefit, otherwise the tax offset is NIL.

Age 55 to 59

A tax offset of 15% applies only to the taxed element of the taxable component. This applies also to death benefit income streams if both the recipient and the deceased are aged less than 60.

Over Age 60

The taxed element of the taxable component is tax free and therefore the tax offset is NIL. The untaxed element of the taxable component is not tax free and the tax offset is 10%. This also applies to a death benefit income stream if one or both the deceased and the recipient are aged 60 or over.

Up to 30 June 2007

A tax offset applies to allocated pensions that meet the definition of 'rebatable superannuation pension'. If your SMSF is a complying superannuation fund under the Superannuation Industry (Supervision) Act 1993, then an allocated pension paid from the fund will generally be a rebatable superannuation pension.

Generally, the formula for calculating the tax offset is:

Rebatable 27H Amount (1) X 15% X Rebatable Proportion of Pension (2)

1) The rebatable 27H amount is the gross pension income for the year minus the deductible amount.

2) A rebatable proportion ranges from 0 to 1, so if it is less than 1 it reduces the tax offset. Where a recipient’s benefit exceeds his or her reasonable benefit limit, the RBL determination issued by the ATO will show the rebatable proportion.

For pensions other than death or disability pensions, no rebate can be claimed for pension payments received before the recipient turned 55 years of age.

Links to expert information on this topic

CALCULATING THE COMPONENTS OF A SUPER BENEFIT

SUPER-RELATED TAX OFFSETS

TD 2006/35W ON SPLITTING AFTER MARRIAGE BREAKDOWN

This page was last modified on 29 December 2020

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