Undeducted purchase price of pensions and annuities

What is a deductible amount?

Before 1 July 2007, pension income from your super fund or life insurance annuity was counted in your taxable income, but it was reduced by a deductible amount. The deductible amount was based on your UPP and was the amount of your pension or annuity income that you could receive tax-free each year.

The deductible amount of your super pension or life insurance annuity could be calculated by dividing your UPP by your life expectancy at the time your pension started, based on your age and gender. Your fund would calculate this amount for you.

UPP ÷ life expectancy (at time of receiving pension) = deductible amount

If you didn't claim a tax deduction when you made the contributions to your pension or annuity, then you could claim the deductible amount when you were able to access the money. If you were allowed to claim a deductible amount you could include this amount as a tax deduction in your income tax return.