Question: My client will be commencing an allocated pension prior to her 55th birthday using the unrestricted, non-preserved monies in her superannuation fund. She requires an income from her allocated pension of $20,000 per annum, payable monthly. The client turns 55 in December 2004. What is the rule in respect of the 15 per cent superannuation rebate when the recipient turns 55 during the income year, will she be entitled to the full 15 per cent rebate?
Answer: When a superannuation pension or annuity income recipient turns 55 in the relevant income year, the 15 per cent pension and annuity tax rebate is only payable in respect of payments made after the taxpayer’s 55th birthday.
As your client turns 55 in December, some of the income payments, if paid monthly, will not be eligible for the 15 per cent rebate.
If your client can defer income payments until after her 55th birthday, she will be able to claim the full 15 per cent tax offset on the total taxable amounts received during the year.
Deferring income payments until after the income recipient has reached age 55 can usually be arranged by making a nomination to the superannuation fund trustee. For public offer superannuation funds, you need to notify the fund administrator and see whether the option to defer payments is available. In the case of a self-managed superannuation fund, evidence documenting the nomination may be required.
Justine Harris is head of professional development, Tribeca .
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