The Minister for Superannuation and Corporate Law, Senator the Hon Nick Sherry, today announced that the Government will legislate to make superannuation lump sum payments tax free where paid to persons suffering from terminal medical conditions.
Amendments to the tax law to give effect to this measure, contained in the Tax Laws Amendment (2008 Measures No. 1) Bill 2008, were introduced into Parliament today.
"The Government is relieving some of the financial stress which terminally ill persons and their families may be experiencing as a result of their difficult circumstances," Minister Sherry said.
"We supported this change in the past. However, we have extended the previous government's announced measure so that tax free treatment will apply to payments made on or after 1 July 2007, rather than 12 September 2007."
Currently, superannuation lump sum payments that are paid from taxed funds to individuals under the age of 55 are taxed at a maximum rate of 21.5 per cent (including the Medicare levy). Higher tax rates apply to lump sums paid from untaxed funds.
The tax free treatment will apply to lump sums from both taxed and untaxed funds paid to persons with terminal medical conditions.
The Government will also introduce a new condition of release to give persons with terminal medical conditions unrestricted access to their superannuation benefits. Details of this are expected to be released shortly.