Family tax benefits: do my tax-free super benefits count as income?

Q: Apart from a Public Sector PSS Super account, I have a superannuation account with AGEST to which contributions were made solely through salary sacrifice arrangements. I am about to retire from the Public Sector (age 60) and I am able to draw down a lump sum from AGEST which comes as a tax-free amount which, as confirmed by AGEST, is not required to be added to my tax return. If I decide to draw down on this fund, are you able to advise whether the amount taken (lump sum) needs to be included in the income details required by Centrelink to determine eligibility to payment of FTB part A (we have children in our care and receive FTB)? I have not had much luck in getting advice from Centrelink on this. Thanks and what a great site!

Trish’s response: Many thanks for your kind words on our website. I agree with you that it is tricky getting information on this topic. For future reference, the most appropriate Government website to visit for information on this topic is the Family Assistance Office.

Tax-free superannuation benefits, including superannuation lump sums, are not counted as income for the FTB income test. Originally, the Government had announced such benefits would be counted towards the income test from July 2009, but in the May 2009 Federal Budget the Government announced this would no longer be the case.

If you check out the definition of ‘adjusted taxable income’ (which is the same income test used for the Commonwealth Seniors Health Card), you may notice that the definition refers to certain tax-free Government pensions that are counted towards the income test (click here). These pensions are very specific tax-free government-funded pensions related to special disability or military pensions, rather than broader tax-free superannuation pensions.

Note: My response to this question is of a general nature and you must confirm your entitlements with the Family Assistance Office.

I explain the July 2009 changes to the income test in detail in my article, All super payments count for Seniors Health Card from July 2009