In March 2020, the Administrative Appeals Tribunal (AAT) in Brisbane upheld the objections of the three Veterans against the Australian Tax Office (ATO) treatment of their DFRDB and MSBS Class A and B Invalidity Benefits paid by the Commonwealth Superannuation Corporation (CSC). This effectively meant that the Invalidity Benefits paid by CSC should be treated as lump sum payment and not as superannuation income stream benefit, i.e., less tax to be paid.
In handing down his decision in the Douglas case, Justice Logan stated his concern about the whole process and treatment of these veterans:
“.. if the encounter in this case is any guide, to the prospect of being “broken by age and war” there must now be added for members and former members of the ADF the prospect of encounter with how we as a Nation State have come to regulate and tax the bargain struck on enlistment.”
In April, the Commissioner of Taxation lodged three separate appeals to the Federal Court against the AAT decisions and has advised Veterans the ATO will continue taxing as in the past, until the appeal process is finalised. It also encourages Veterans not to lodge objections, “promising” their rights will be protected.
DFWA disagrees with the ATO advice and advises Veterans to consider completing their Tax Returns in accordance with the decision of the AAT and to exercise their right to lodge objections in line with the AAT decision.
For more information read the main article Veteran Invalidity Benefit Taxation here.
Disclaimer: this advice is for general information only. It should not be taken as constituting professional advice from the Defence Force Welfare Association. Affected persons should consider seeking independent legal, financial, taxation or other advice to check how this information relates to your unique circumstances.