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Re: DFRDB Pensions

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Newbie

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I am now retired and am in receipt of a DFRDB Pension as well as a PSS Pension and over the age of 60 Years. My tax agent tells me that both pensions are tax free. Is that correct?

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ATO Certified

Devotee

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Hi @Radarz 

 

In addition to what @macfanboy has said, DFRDB and PSS pensions are 'capped defined benefit income streams'; therefore, because of the transfer balance cap, which has applied since 1 July 2017, these pensions are subject to an annual income cap (currently $100,000). This means that the tax impact is different depending on whether your annual income from these pensions (combined) is above or below $100K.

 

@macfanboy wrote:

I would also call the ATO and confirm it on 13 28 61


I'd suggest calling CSC in the first place because they'll be able to tell you more about these pensions and how they'll be taxed, including any withholding that will be applied from your pension payments.

 

Here are some more resources on the CSC website:

Here are some more resources on the ATO website:

At the end of the financial year CSC will send you PAYG payment summary, which will help you complete your tax return, using the ATO's capped defined benefit income cap calculator.

 

JF

 

This is my personal view; I’m an ATO employee who chooses to help out here in my own time.

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Taxicorn

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Your DFRB & PSS pension is taxed at 0% for the taxed free component and at Your Marginal Tax Rate less 10% offset for the Untaxed Element:

 

https://www.csc.gov.au/-/media/Files/DFRDB/Factsheets/DF05-dfrdb-taxation-offsets-for-pensions.pdf

 

https://www.csc.gov.au/-/media/Files/PSS/Factsheets/PSF27-tax-and-your-pss-pension.pdf

 

So no they are not tax-free.

 

I would also call the ATO and confirm it on 13 28 61

 

Generally, tax is paid on super going in except for ones paid by a public sector fund for the commonwealth, state and territory government departments, with those it is taxed coming out.

 

https://www.ato.gov.au/Individuals/Super/In-detail/Withdrawing-and-using-your-super/Withdrawing-your...

Highlighted

Best answer

ATO Certified

Devotee

Replies 0

Hi @Radarz 

 

In addition to what @macfanboy has said, DFRDB and PSS pensions are 'capped defined benefit income streams'; therefore, because of the transfer balance cap, which has applied since 1 July 2017, these pensions are subject to an annual income cap (currently $100,000). This means that the tax impact is different depending on whether your annual income from these pensions (combined) is above or below $100K.

 

@macfanboy wrote:

I would also call the ATO and confirm it on 13 28 61


I'd suggest calling CSC in the first place because they'll be able to tell you more about these pensions and how they'll be taxed, including any withholding that will be applied from your pension payments.

 

Here are some more resources on the CSC website:

Here are some more resources on the ATO website:

At the end of the financial year CSC will send you PAYG payment summary, which will help you complete your tax return, using the ATO's capped defined benefit income cap calculator.

 

JF

 

This is my personal view; I’m an ATO employee who chooses to help out here in my own time.