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tpd and tax...

Discussion in 'Superannuation, SMSF & Personal Insurance' started by jayce, 11th Jun, 2011.

  1. jayce

    jayce Member

    Joined:
    27th Feb, 2010
    Posts:
    10
    Location:
    brisbane, qld
    this time last year i was getting ready to hand in my tpd application to sunsuper. i have extreme mental health issues. i put a lot of work into it. it was worth it. with my age and gender (29 female)... i got approved for $228000 within 3 months. i always thought tax would be taken out before i received it... but i received the full amount within the week.

    now tax time coming up... i am on centrelink's dsp which i think is the only payment that doesn't attract tax... am i going to have to pay tax on the money i received last year. i know it has something to do with how many working days u would have left until u are of a retirement age etc.

    just so other people know... it didn't affect my dsp. i think it's something like $300 000 + to affect your pay for non home owners.

    i can answer q's about the tpd process if others need me to... i'd also appreciate some input about the tax.

    cheers... thanks.
     
  2. Johny_come_lately

    Johny_come_lately Well-Known Member

    Joined:
    1st Jul, 2009
    Posts:
    703
    Location:
    SE Queensland
    Hi jayce

    I am glad you recieved your payout. In the scheme of things( at your age) it isn't very big. You could easily spend it before reaching 40. Invest it wisely. Each fortnight top up your pension with your (interest/distributions/dividends) only. Live within your means, and you will have this money for life.

    Many a person has won lotto and in 3 years they have spent the lot. Please be careful. There are a lot of scammers/dodgy people out there, ready to take your money. Is it possible to create a trust, to look after you when your illness gets bad?





    Johny. :)
     
  3. jayce

    jayce Member

    Joined:
    27th Feb, 2010
    Posts:
    10
    Location:
    brisbane, qld
    i know people won't understand this... but i don't want to be around for ever. it's a part of my mental health problem... i attempted suicide in december as i didn't want to turn 30. my gf and i have invested the money wisely. it's hard to say... cause i know people will think i'm crazy... but i don't want to be here for too many years more. (i have a psych and a counsellor) thanks though.
     
  4. Johny_come_lately

    Johny_come_lately Well-Known Member

    Joined:
    1st Jul, 2009
    Posts:
    703
    Location:
    SE Queensland
    During high school my mum and dad split up. I had two friends that supported me. They both took their lives. They helped me, but couldn't help themselves. Live every day to its fullest. That what I say.




    Johny.
     
  5. funkandjunk

    funkandjunk Member

    Joined:
    28th Jun, 2010
    Posts:
    16
    Location:
    Sydney
    Hi Jayce

    Good evening Jayce,

    I am very surprised that given your age, there was no tax withheld. You are right about the formula.

    Basically, th tax rules provide a concession for benefits accessed under permanent incapacity. The below formula gives you a higher tax free component in addition to what you already may have in your super balance.

    The formula is

    Days to retirement / Service period in the fund + Days to retirement
    Multiplied by the amount of the withdrawal.

    Unless your service period in the fund started on the same day that you ceased to be gainfully employed, it is formulaically not possible to have entire tax free component.

    The relevance about harping on about tax free component is that when you withdraw money from super, whatever comes out of TFC, you don't pay any tax on that. Any remainder between TFC and the amount withdrawn is taxable component. Based on your age, whatever was taxable component, the super fund will withhold 21.5%.

    Depending on how big the taxable component was and your other income, there are provisions to claim any excess tax paid through your tax return. What this means is that if your ibcome was relatively low and based on that income uou shouldn't have paid 21.5% you could het a refund of any excess tax back through your tax return.

    I would strongly recommend you to revisit the paperwork that you received from the fund or of course it may be easier just to call them and enquire / confirm if tax had been withheld.

    In relation to Centrelink, I would be surprised if you are receiving the full rate. You are right that under the assets test, single non homeowner can have $331K in assets you still have to look at the income test. On the assumption that you did not pit the money back into super, and invested it in some sort of financial investment like shares, managed funds, seeming under the income test eould mean that you won't get the full DSP rate.

    Again would strongly recommend you seek advice to confirm and maximize your DSP rate.

    Furthermore, if someone is lookijg after you they may want to consider typical care based payments such as Carer Payment or Carer Allowance. Bot to say that if relevant a care will be eligible, bit worth exploring eligibility for.

    Are you living with your parents? Rent assistance?