Taxation
General
Fortnightly benefits from the Scheme are subject to normal pay-as-you-go tax deductions, in much the same way as your salary is subject to tax assessment. Lump sums are also taxed, but generally at more favourable rates, depending on your age when they become payable.
The DFRDB Authority deducts tax on the following lump sums:
- gratuities
- commutations
- lump sum invalidity payments.
The Commissioner of Taxation has directed, using discretionary powers contained in the Tax Act, that no tax be deducted from refunds of contributions which have not earned interest. This applies to all such refunds from the DFRDB Scheme.
The taxation legislation also provides that no tax is deducted where the total lump sum is rolled over to an approved deposit fund or to another superannuation scheme, or is used to purchase a deferred annuity. However, 15% contributions tax will be deducted from the taxable component, untaxed element of the rollover amount by the institution receiving the rollover.
This booklet does not cover taxation in any detail as it is an area of such rapid and constant change. However, ComSuper regularly updates its series of DFRDB fact sheets, including ‘DB05 - Taxation of Benefits’. You can obtain fact sheets from the DFRDB website www.dfrdb.gov.au or by contacting ComSuper.Top
Lower taxation of benefit
When you leave the Defence Force remember to complete an Annuity and Superannuation Pension Recipient Declaration form and send it to ComSuper. Otherwise, your retirement or invalidity pay will be taxed at the top marginal rate.
If you need any information on the way your future benefits will be taxed, you should contact ComSuper on 1300 001 677.