Terminally ill Australians to receive superannuation lump sums tax free

The Minister for Superannuation and Corporate Law, Senator the Hon Nick Sherry, 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, have been introduced into Parliament.

“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,” he said.

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 are expected to be released shortly.