Military pensioners march through loophole
The Federal Government has moved to close off a loophole created by last year’s Budget which saw some military invalidity pensioners moving to reduce the tax on their pensions by taking it as a series of lump sum payments.
The Minister for Revenue and Financial Services, Kelly O’Dwyer announced the closing of the loophole on Friday, claiming that since September, last year, around 390 military invalidity pensioners had sought to utilise the loophole.
In doing so, O’Dwyer seemed to indicate that the military pensioners started using the loophole because its existence had been brought to their attention by the Government’s Budget move.
“Before the 2016-17 Budget, some superannuants were using a loophole to reduce their tax obligations on their superannuation income streams by electing to treat their income as a series of lump sum payments. Elsewhere in the tax system similar attempts to reduce tax are not sanctioned and the enabling loopholes are closed,” O’Dwyer’s formal announcement said.
“The Government announced on 3 May 2016 as part of the 2016-17 Budget that this loophole would be closed from 1 July 2017. At this time not one military invalidity pensioner or military personnel was using this loophole,” her statement said. “Only after the Budget announcement was made, a small number of military invalidity pensioners decided to change their arrangements to utilise the loophole, and reduce their tax obligations, prior to its closure.”
“Since September 2016, around 390 out of 11,800 military invalidity pension recipients have elected to make use of the loophole.”
O’Dwyer said none of the individuals who elected to access the loophole would be subject to any back payment of tax, however they would no longer be able to use the loophole from 1 July 2017.
Recommended for you
Government has introduced a bill to Parliament to legislate the first stream of the QAR reforms.
ASIC now has a 1:1 ratio when it comes to court success in the enforcement of crypto activities and more action is expected as Treasury seeks to introduce a regulatory framework.
A leading governance body has hit out at “specialist interest groups proposing ad hoc law reform” when it comes to reforms of financial services legislation and believes an independent body is needed.
The release of ALRC’s final report into financial services legislation has highlighted financial advice as a “significant” focus as it seeks to reduce costs and help advisers understand their obligations, alongside the Quality of Advice Review.
