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  • Treatment of military invalidity benefits following Full Federal Court decision

    Due to the Full Federal Court decision in Commissioner of Taxation v Douglas [2020] FCAFC 220, the tax and super treatment of specific invalidity benefit payments has changed. We are currently running a remediation program for historical income tax assessments and super reporting for impacted individuals.

    Individuals receiving military invalidity benefits – impact of court decisions explains how to work out if you are affected by this decision.

    If you are affected by the court decision, we have also provided information on this page to help you prepare your 2021 individual income tax return.

    If your pay as your go (PAYG) withholding has increased because of the court decision, review our PAYG for military superannuation payments page for more information.

    Update on existing amendments

    Initial opt-ins of the streamlined amendment process has now closed.

    For those who opted in before 31 May, remediation has taken longer than anticipated as we received a high number of complex cases. We appreciate your patience as we work through the backlog this has created.

    If you opted-in and your amendments have not yet been processed, it may mean that your circumstances are more complex, such as if you:

    • receive disability superannuation benefits
    • received a lump sum payment in arrears
    • have multiple super schemes
    • have been party to a family law split
    • have been declared bankrupt
    • have multiple income years to amend.

    At the start of October, we had completed amendments for over 60% of the individuals who opted-in or lodged an objection. We are working through the amendments for the remaining cases as quickly as possible and you do not need to call us for an update or to provide further information.

    Next round of amendments

    You are affected by the court decision if you received invalidity benefits:

    • paid under pensions provided under the Defence Force Retirement and Death Benefits (DFRDB) Scheme and the Military Superannuation and Benefits (MSB) Scheme
    • which started on or after 20 September 2007.

    If you are affected by the court decision and did not initially opt-in or have not lodged an objection, we will be writing to you from late October to inform you on the next steps including how you can participate going forward.

    If you believe you are impacted by the court decision, make sure your details are correct with us. If you do not update your details, you may miss out on important information. You can update your details using ATO online services.

    If you believe you qualify for the disability concession, we recommend applying to the Commonwealth Superannuation Corporation (CSC) for a determination before you take part in the streamlined amendment process. More information on this can be found in our additional guidance.

    If you have opted-in and then subsequently received a DSB determination from CSC, CSC will report this to the ATO on a regular (but not real time) basis. When reported, we will conduct a review of your assessments in due course.

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      Last modified: 06 Oct 2021QC 62497