Military superannuation pensions are paid from what are defined as “untaxed” superannuation funds. Under the Better Superannuation taxation changes those pensions are not only taxed but also included in pensioners total income for tax purposes.
The only reason the military schemes were “untaxed” was because of a Government convention that it did not pay tax to itself. Had it done so, the net cost to the Government would have been exactly the same.
The Better Super distinction between “taxed” and “untaxed” schemes is artificial but it leads to distinct disadvantages for military pensioners. The most obvious disadvantage is that military superannuation retirement pensions are taxed.
The present provisions, although including a 10% rebate, are not equitable with the treatment given to most other superannuants in the Australian community. These provisions also include an additional effect of taxing military pensions at the taxpayers marginal rate, which puts them at a significant disadvantage when compared with taxpayers receiving pensions from “taxed” funds.
We want the Government to remove income tax on DFRB/DFRDB/MSBS military superannuation pensions, including death and invalidity, in line with most of the Australian community; or, at the very least, taxed military superannuation pensions be separated from other taxed income on the taxpayers tax returns.