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INCOME TAX ASSESSMENT ACT 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-15 - NON-ASSESSABLE INCOME    View history reference

Division 52 - Certain pensions, benefits and allowances are exempt from income tax    View history reference

Subdivision 52-A - Exempt payments under the Social Security Act 1991    View history reference

Operative provisions

SECTION 52-25  Tax-free amount of certain bereavement lump sum payments  

 View history reference ITAA 36

52-25(1)  

 View history reference
This section applies if a lump sum of any of these categories of social security payments becomes due to you because of your partner ' s death.
  Category of social security payment
Age pension
Carer payment
Disability support pension
Mature age allowance (paid under Part 2.12A)
Mature age partner allowance
Special needs age pension
Special needs disability support pension
Special needs wife pension
Wife pension

[ CCH Note: S 52-25(1) will be amended by No 26 of 2018, s 3 and Sch 3 item 7, by omitting " Wife pension " from the table, effective 20 March 2020. No 26 of 2018, s 3 and Sch 3 item 102 contains the following saving provision:

102 Saving provision - Income Tax Assessment Act 1997  
102  Despite the amendments made by this Schedule, items 34.1 to 34.4 of the table in section 52-10 and sections 52-15 and 52-25 of the Income Tax Assessment Act 1997 , as in force immediately before the commencement of this item, continue to apply on and after that commencement in relation to a payment of wife pension under Part 2.4 of the Social Security Act 1991 before, on or after that commencement.

]

52-25(2)  

The total of the following are exempt up to the *tax-free amount:


(a) the lump sum payment;


(b) all other payments that become due to you under the Social Security Act 1991 during the bereavement lump sum period.
 View history reference

52-25(3)  

 View history reference
This is how to work out the tax-free amount :

Method statement

Step 1. 

Work out the payments under the Social Security Act 1991 that would have become due to you during the bereavement lump sum period if:

(a) your partner had not died; and
(b) your partner had been under pension age; and
(c) immediately before your partner died, you and your partner had been neither an illness separated couple nor a respite care couple.

Step 2. 

Work out how much of those payments would have been exempt in those circumstances.


Step 3. 

Work out the payments under the Social Security Act 1991 or Part III of the Veterans ' Entitlements Act 1986 that would have become due to your partner during the bereavement lump sum period if:

(a) your partner had not died; and
(b) immediately before your partner died, you and your partner were neither an illness separated couple nor a respite care couple;

even if the payments would not have been exempt.


Step 4. 

Total the payments worked out at Steps 2 and 3: the result is the tax-free amount .

Example:

You are receiving a disability support pension of $300 a fortnight and a pharmaceutical allowance of $5 a fortnight. You are over pension age. Your partner is receiving a partner allowance of $250 a fortnight and rent assistance of $75 a fortnight.

Your partner dies. Seven instalments are due to you during the bereavement lump sum period. You work out the tax-free amount as follows:

Step 1: The instalments that would have become due to you during the bereavement lump sum period are:

$300 + $5 = $305

The total for the period is $2,135.

Step 2: The exempt component of each instalment is $5. The total for the 7 instalments is $35.

Step 3: The instalments that would have become due to your partner during the same period are:

$250 + $75 = $325

The total for the period is $2,275.

Step 4: The tax-free amount is:

$35 + $2,275 = $2,310

[ CCH Note: S 52-25(3) will be amended by No 26 of 2018, s 3 and Sch 7 item 4, by substituting " jobseeker payment " for " partner allowance " in the example, effective 1 January 2022.]


 



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