Senator the Hon Nick Sherry, Minister for Superannuation and Corporate Law, has welcomed the passage through Parliament of Tax Laws Amendment (2008 Measures No.2) Bill 2008, which makes superannuation lump sum payments tax free when paid to individuals suffering from terminal medical conditions.
"The Government has taken decisive action to alleviate the financial stress which many terminally ill people and their families may experience in these difficult circumstances."
"As previously announced, we will also extend the measure so that tax free treatment will apply to payments made on or after 1 July 2007, rather than 12 September 2007," Minister Sherry said.
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.
The Government has also introduced a new condition of release to give persons with terminal medical conditions unrestricted access to their superannuation benefits.