Personal injury election amounts
People who are eligible can exclude some of their personal contributions from counting towards their non-concessional contributions cap by electing for the amounts to be excluded as a personal injury payment.
Personal injury election amounts are personal contributions that arise from a personal injury and for which you validly claim the exclusion. There is no limit on the amount you can claim as a personal injury election amount, but there are strict conditions on the contributions you can claim the exclusion for.
You can only use the exclusion for that part of the payment that is compensation or damages for your personal injury.
You must advise your fund that you are claiming the exclusion before or when you make the contribution. Otherwise, your fund must report the amounts as personal contributions.
The election can be made in the approved Contributions for personal injury election form, although this is not compulsory. However, you must provide your fund with all the information required by this form.
If the exclusion does not apply to you, the amount will be treated as a normal personal contribution and count towards your non-concessional contributions cap.
Example: Personal injury compensation
Bruce was injured in a car accident. As a result of his injury, he is not expected to ever work again in a role for which he is suited through education, training or experience. Two qualified medical practitioners have certified this.
Three years after his injury, Bruce receives $2 million from the insurers as a result of a structured settlement of his claim. $1.5 million of his payment was compensation for personal injury and the remaining $500,000 was compensation for medical costs.
Bruce contributes $1.75 million to his super within 90 days of receiving the payment, and uses the remaining $250,000 to pay the debts he accrued for hospital stays and physiotherapy as a result of his injury.
Bruce can only claim the exclusion for $1.5 million of the contribution (the part of the payment which was compensation for the personal injury).
End of example