Private ruling: Disability superannuation benefit
Date of advice: 8 December 2025
Published: 27 January 2026
Ruling period: Income year ending DD MM YYYY
Date scheme commenced: DD MM YYYY

Ruling: Q1: Does your superannuation income stream benefit constitute a disability superannuation benefit as defined in section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes

Relevant facts and circumstances: You worked for a government agency. You commenced a pension on DD MM YYYY. You applied for an invalidity pension respectively on the same day. On DD MM YYYY, you received a decision notice from your superannuation fund (the Fund) stating that your application for invalidity benefits has been approved retrospectively. You were classified by the Fund as class B meaning your incapacity is at least 30% but less than 60%. It was determined by the Fund that in each employment in the agency, you would be moderately incapacitated. The Fund found that your retiring impairments diminished your capacity to undertake the established kinds of civil employment by an overall moderate degree as at your separation. As of DD MM YYYY, your total annual pension was $XX per annum (including indexation) with an amount of $XXX calculated gross in arrears for the period DD MM YYYY to DD MM YYYY. On DD MM YYYY, you applied for a private binding ruling with the form 'individual retired due to permanent disability'. You provided certification from two legally qualified medical practitioners that because of your disability or suffering from a medical condition, it is unlikely you will ever be employed in a capacity for which you are reasonably qualified for through education, training or experience.

Relevant legislative provisions: Income Tax Assessment Act 1997 sub section 301-40(2) | Income Tax Assessment Act 1997 section 307-10 | Income Tax Assessment Act 1997 section 307-145 | Income Tax Assessment Act 1997 section 995-1(1) | Income Tax Assessment (1997 Act) Regulations 2021 regulation 307-70.02 | Superannuation Industry (Supervision) Act 1993 section 10 | Superannuation Industry (Supervision) Regulations 1994 regulation 1.06(1)

Reasons for decision: Summary: Detailed reasoning Section 307-70 of the ITAA 1997 states that a superannuation income stream benefit is a superannuation benefit specified in the regulations that is paid from a superannuation income stream. Furthermore, a superannuation income stream has the meaning given by the regulations. Regulation 307-70.02 of the Income Tax Assessment (1997 Act) Regulations 2021 states that the meaning of a superannuation income stream includes a pension of the kind you are currently receiving. Section 10 of the Superannuation Industry (Supervision) Act 1993 defines 'pension' as, except in the expression old-age pension, includes a benefit provided by a fund, if the benefit is taken, under the regulations, to be a pension for the purposes of this Act. Additionally, regulation 1.06(1) of the Superannuation Industry (Supervision) Regulations 1994 states the meaning of pension as follows: (1) A benefit is taken to be a pension for the purposes of the Act if: (a) it is provided under rules of a superannuation fund that: (i) meet the standards of subregulation (9A) or 1.06A(2); and (ii) do not permit the capital supporting the pension to be added to by way of contribution or rollover after the pension has commenced; and (b) in the case of rules to which paragraph (9A)(a) applies and that meet the standards of subregulation (9A)--the rules also meet the standards of regulation 1.07D; and (c) in the case of rules to which paragraph (9A)(b) applies and that meet the standards of subregulation (9A)--the rules also meet the standards of regulation 1.07B. Furthermore, section 995-1(1) of the ITAA 1997defines 'disability superannuation benefit' as follows: "disability superannuation benefit" means a * superannuation benefit if: (a) the benefit is paid to an individual because he or she suffers from ill - health (whether physical or mental); and (b) 2 legally qualified medical practitioners have certified that, because of the ill - health, it is unlikely that the individual can ever be * gainfully employed in a capacity for which he or she is reasonably qualified because of education, experience or training. Therefore, as you have provided evidence from two legally qualified medical practitioners certifying that because of the ill health, it is unlikely you can ever be gainfully employed in a capacity for which you are reasonably qualified because of education, experience or training. Therefore, your income stream benefit constitutes a disability superannuation benefit as defined in section 995-1 of the ITAA 1997. Disability superannuation benefit can be paid in form of a lump sum or an income stream, and special rules apply to the taxable component. Given that you are under preservation age and receiving a superannuation income stream benefit which constitutes a disability superannuation benefit you are entitled to a tax offset equal to 15% of the taxable component of the benefit as per subsection 301-40(2) of the ITAA 1997. For completeness, it is noted that section 307-145 of the ITAA 1997, which was originally quoted in your application is not applicable to your circumstances, as it relates to a superannuation lump sum.