TPD

Hi
I am 57 (58 in Apr) I am about to go through the process of applying for a TPD. My policy is part of my superannuation ( which is currently sitting idle as I am not working) my question; if I am successful in my application, can I have the payout "sit" in my super until I turn 60, then draw down to take advantage of any tax benefit ?

 

If you will not be working then look at getting advice on using the Low Rate Threshold to access some tax free component and up to $195K of any Taxable component Taxed or Untaxed Elements, this would minimise the tax on a TPD payment from super (untaxed elelment) to 17% on that component and nil tax on the tax free component. You can do this between 56-59 years of age. Otherwise the strategy of waiting until 60 is a good alternative to mimise the tax to up to 17% as the TPD payout will have a Taxable Component (Untaxed Element). There are pension options too

 

What is Low Rate Threshold? I am drawing on TPD payout as income stream and pay no tax because there is 15% disability offset that applies , so by taking the minimum 4% per year as pension , the offset is higher than tax payable so I don't pay tax I get the 4% tax free.

 

Hi John, best to seek advice on this. Previously we have helped similar clients have the TPD payment retained in superannuation and started a tax free disability pension which can work very well. This can also make use of the 15% tax offset and also the thresholds as mentioned above.