Frequently Asked Questions
Find out more about TPD claims
1. What happens once my Total and Permanent Disability (TPD) claim is approved?
Once your TPD claim is approved, this amount is paid into your superannuation account. You can then access your super funds
under what is called “Permanent Incapacity”, meaning you are unlikely to work again.
2. Will I pay tax if I withdraw funds from superannuation?
You will pay tax on the withdrawal if you are under preservation age (between 55 and 60 depending on your date of birth) and this tax rate is different for everyone, it is even different for the same person with two different funds.
Between your preservation age and age 60 you can withdraw an amount tax-free. All withdrawals from superannuation after age 60 are tax free.
3. Do I have to withdraw my entire balance now? And if I leave some money in my superannuation could it be locked away until retirement or until I provide further medical reports?
No, you do not have to withdraw your entire balance now. Once your superannuation fund has determined that you meet the “Permanent Incapacity” definition, you can access your superannuation at any time in the future. You can effectively use your superannuation fund as a bank account, making withdrawals when you need funds.
Warning: Some superannuation funds require updated medical certificates every 1 or 2 years so you can get the tax reduction. We can help you understand your particular superfund. Just remember if you leave funds in superannuation they may be invested in assets which may move up and down in value depending on financial market conditions.
4. My fund has written to me saying I now have $50,000 in my “tax-free” component and $70,000 in the “taxable” component. Can I just withdraw the $50,000 tax-free amount?
No, when you make a withdrawal the funds will be withdrawn proportionally from the tax-free and taxable components.
5. Will my Centrelink benefits be impacted if I make a withdraw from super?
That depends! Different Centrelink benefits have different “means testing”. There is further information on this in the Centrelink section and you may need to talk to Centrelink about your personal circumstances.
6. Will making a withdrawal from superannuation affect my Child Support payments?
Yes it might. If you are under age 60. The taxable component from your withdrawal will be included in your adjusted taxable income for the financial year and therefore potentially impact your Child Support payments.
7. Will making a withdrawal from superannuation impact my Medicare Levy assessment?
The taxable component from your withdrawal will be included in your adjusted taxable income for the financial year and therefore potentially impact the amount of your Medicare Levy.
8. I would rather deal with someone face to face, should I go and talk to my local financial adviser or accountant about this?
TPD claims through super is a very complex area and unless your accountant or financial adviser specialise in this area it is likely they won’t understand it well enough to be able to help you.
We often hear accounts incorrectly say “I thought TPD benefits paid through super were tax free”.
Also many financial planners are looking for clients with money to invest and that want to have a long term relationship. Our service is first about helping you understand your TPD benefit and making sure you make good decisions and know what steps to take next.
This is why people are referred to us from all around Australia. Then if you need further ongoing help we can talk about this.