The terminally ill will be able to access their superannuation under the age of 60 without being taxed on their lump sum benefit.
The Minister for Revenue and Assistant Treasurer, Peter Dutton, announced the changes and said the Government decided to change this area of tax legislation to “remove as many of the stresses as possible for people in this terrible situation”.
The Government has asked the Commissioner of Taxation to consider changing the rate at which super funds are required to withhold payments, until the legislation passes into law.
Currently, individuals under the age of 55 who access their lump sum super benefit are subject to a maximum tax rate of 20 per cent, plus the Medicare levy. This tax is generally withheld by the superannuation fund when it makes the lump sum payment.
While the actual tax payable may be lower as it depends on the individual’s marginal tax rates, any refund they may be entitled to would not be determined until the end of the financial year.
Amendments to the legislation will have effect for payments received after today.