Personal Injury Superannuation Contributions

How can superannuation help you tax effectively invest and receive income from a personal injury claim? This week, I’ve put together a quick guide to considerations when being paid a personal injury claim and how you can use super to make the most of your personal injury claim.

You can view the attached fact sheet here or see the summary below.

Summary

• Eligible personal injury contributions are excluded from the NCC cap and can be made regardless of the contributor’s TSB
• The main benefit is the ability to use all or part of the personal injury payment to establish an income stream (usually in the form of an account based pension), where both earnings on assets supporting the account based pension (ABP) and income payments from the ABP are tax-free, regardless of the client’s age.
• Personal injury contributions are preserved when made to the superannuation fund. The member must then meet a superannuation condition of release to have these released as either a lump sum or income stream.
• A qualifying personal injury payment must arise from a;
  • structured settlement
  • lump sum workers compensation payment
  • court order for a personal injury payment
• A personal injury contribution must be made to the superannuation fund within 90 days of the latest of:
  • the day on which personal injury payment is received
  • the day an agreement for settlement of a personal injury payment was entered
  • the day on which a court order for the personal injury payment was made
• There are restrictions to accessing the money once in super, however, you must declare in the personal injury cap election form that because of the personal injury, it is unlikely that the person can ever be gainfully employed in a capacity for which they are reasonably qualified because of education, experience, or training. Further, two legally qualified medical practitioners must certify that this is the case. Gainfully employed means employed or self-employed in any business, trade, profession, vocation, calling, occupation or employment.
• Personal injury contributions are excluded from a person’s total superannuation balance, meaning that eligible amounts can be contributed regardless of the person’s existing super balance.
• The use of a ‘Special Disability Trust’ (SDT) for personal injury payments is not an option as the disabled person is ineligible to contribute to the SDT on their own behalf.

As always, feel free to get in touch if you would like to discuss a claim with us.

Cheers,

Nick