Treasury Laws Amendment (2022 Measures No. 4) Act 2023 (29 of 2023)

Schedule 9   Taxation of military superannuation benefits: Reversing the Douglas decision

Income Tax Assessment Act 1997

7   At the end of Division 301

Add:

Subdivision 301-F - Veterans' superannuation (invalidity pension) tax offset

Table of sections

301-275 Veterans' superannuation (invalidity pension) tax offset

301-275 Veterans' superannuation (invalidity pension) tax offset

(1) You are entitled to a *tax offset for an income year if:

(a) you are an individual; and

(b) during the income year, you receive one or more *superannuation lump sums that are payments of:

(i) invalidity pay within the meaning of the Defence Force Retirement and Death Benefits Act 1973; or

(ii) an invalidity pension under the superannuation scheme established under the Military Superannuation and Benefits Act 1991; or

(iii) a pension mentioned in a paragraph of subsection 307-70.02(1A) of the Income Tax Assessment (1997 Act) Regulations 2021.

(2) The amount of your *tax offset is worked out as follows:

(a) first, work out the amount by which your basic income tax liability exceeds the total of the amount of your tax offsets (if any) for the income year under:

(i) this Division (other than this Subdivision); and

(ii) Subdivision AB of Division 17 of Part III of the Income Tax Assessment Act 1936;

(b) next, work out the total of:

(i) the amount worked out under paragraph (a); and

(ii) the amounts (if any) of *Medicare levy and *Medicare levy (fringe benefits) surcharge you are liable to pay for the income year;

(c) next, work out the total of:

(i) the amount worked out under paragraph (a); and

(ii) the amounts (if any) of Medicare levy and Medicare levy (fringe benefits) surcharge you are liable to pay for the income year;

on the assumptions mentioned in subsection (3);

(d) next, work out the amount (if any) by which the total worked out under paragraph (b) exceeds the total worked out under paragraph (c).

(3) For the purposes of paragraph (2)(c), the assumptions are that:

(a) each *superannuation lump sum mentioned in paragraph (1)(b) were a *superannuation income stream benefit; and

(b) for the purposes of section 307-125 (proportioning rule), the invalidity pay, invalidity pension or pension mentioned in paragraph (1)(b) of this section were a *superannuation income stream.