Free superannuation TPD Tax Calculator

Learn how the tax works before you make any decisions!

Most people can save significant tax on their super TPD claim.

Click on the button below to book in your TPD Financial Consultation.

Tax on TPD claims through super is a little complicated. Please read the instructions and disclaimers below very carefully before clicking on the TPD Tax Calculator.

The tax you pay on a TPD claim through superannuation is different for everyone, tax rates can change, and this tax estimate won’t work for a small portion of superannuation funds.

TPD Tax Estimate

Tax paid on TPD insurance claims paid through superannuation is complex and paid at different rates for everyone. Using our TPD Tax Calculator, you can work out how much tax you will pay on your TPD Claim and Superannuation withdrawal.

To complete this tax calculation you will need the following information:

Your date of birth
Your “date last worked” – this could be the date you stopped working or the date you were separated from employment (note, as you can tell this date can be a grey area and sometimes superannuation funds use the wrong date often resulting in too much tax being withheld)
Your superannuation account “eligible service date” – you will need to contact your superannuation fund to get this date. This date is usually the earlier of the following:
- The date your super account was established
- The date you commenced employment with the employer that set up your super account
- If you have consolidated superannuation accounts, it will be the earliest eligible service date of all consolidated funds (did you know the ATO can now automatically consolidate your superannuation funds which means you could end up paying more tax…)
YOU MUST CALL YOUR SUPERFUND TO GET YOUR “ELIGIBLE SERVICE DATE”. They will have this date listed on your account, you can not work this out yourself. The date may be your “account start date”, but it may also be an earlier date. So when you call the superfund, ask for these 2 dates.
The amount of TPD and/or super you are planning to withdraw.

Common Questions

It says my retirement “preservation age” is 60. I thought my retirement age was between 65 & 67? The preservation age refers to your superannuation retirement age, after which point most people can withdraw superannuation tax free. The 65 to 67 ages refer to your Centrelink Age Pension Age, which is different.
Can I withdraw the tax-free portion only? No. Your withdrawal will be proportioned between your taxable & tax-free amounts, so you will always pay tax (until you reach preservation age).
If I leave funds in my superannuation account can I access them in future at the lower tax rate? Maybe! While your super stays in the same account that received your TPD claim, your balance will remain in the “taxable” component. You are then relying on your superfund to perform the TPD tax reduction calculation for any future withdrawals and they may require you to provide updated medical certificates in future to continue to receive the tax concessions. Note – there are strategies to get around this so you can lock in your lower tax rate and means you may never have to provide medical certificates again, we can help you with this.

This Australian Tax Office (ATO) link gives further information on the tax treatment of TPD claims: https://www.ato.gov.au/law/view/document?DocID=PAC/19970038/307-145&PiT=99991231235958

Disclaimers

Before using our calculator, please understand the following:

This calculation only applies to TPD claims through superannuation. TPD claims that are held outside of superannuation do not attract tax.
The standard superannuation withdrawal tax rate is 22%, however, following a TPD claim you are likely entitled to the “disability tax-free portion” on your withdrawal, therefore reducing your effective withdrawal tax rate. This calculator helps work this out for you.
Once you reach preservation age (between 55 and 60) you can receive a large super/TPD withdrawal tax free. Once you are 60, super withdrawals become tax free (unless you have an “untaxed element”, see next point)
If your superannuation account is a “defined benefit” super scheme, you may have an “untaxed element” which means you’ll pay a higher rate of tax. Defined benefit schemes are usually local or federal government schemes.
To get the “disability tax-free portion” (see below for more information) your superannuation fund may ask for two medical certificates to confirm you meat the “disability super payment” definition. Usually these are provided during the TPD claim process, but not always.
Your tax rate CAN CHANGE in future. Key reasons for this could be:
- If you rollover another super account into your TPD super account. This can mean you have an earlier eligible service date and therefore a higher rate of tax.
- You may lose your entitlement to the “disability tax-free portion” meaning you will pay the full 22% on withdrawal in future. Some superannuation funds require new medical certificates every 12 months to continue to provide the disability tax-free portion. There are ways around this which we can help you with if you are planning on leaving funds in superannuation.

Please note – superfunds often get their tax calculation wrong. If you want to make sure your calculation is correct, book in for a consultation with us and we can check your calculation.

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Or Get in Touch

Get in touch with us for more information and we’ll email you what you need to know about your TPD claim and how you can book in for our TPD Assessment Consultation.

How Does the Tax Work?

Claim Payment

Total & Permanent Disability (TPD) insurance can be held in a superannuation account or be held directly. Most people have Death and TPD insurance cover automatically set up within their superannuation account, particularly if their superannuation account was set up by their employer.

If you have a TPD claim approved and the insurance was held through your superannuation account the insured amount will be paid into your super account and added to your existing balance (there is no tax payable at this point). You then have access to withdraw a portion of or your entire superannuation account balance (except in certain rare circumstances).

TPD Withdrawal and Tax

If you do then make a withdrawal of your TPD and/or superannuation monies, and you are under your “superannuation preservation age” (which is between 55 and 60 years old, depending on when you were born), then you will pay tax when you go to withdraw these funds.

> See below for details on preservation age.

Your superannuation fund will withhold the tax and pay it to the ATO, they will also provide you with a PAYG summary. This tax withheld is a maximum rate and you may get some of the tax back at the end of the financial year (if a TPD claimant didn’t earn any other income during the financial year they make the withdrawal, then the maximum amount of tax they are likely to get back is roughly $4,000).

TPD Tax Rates

The tax rate to withdraw funds from superannuation for those under their preservation age is 22%.

HOWEVER, when you make a withdrawal after a TPD claim, the superannuation fund will perform a “tax-free uplift” calculation, meaning a portion of your withdrawal will be tax free.

This means everyone will have a different effective tax rate which could be anywhere between 1% and 18%. If you have more than one super account you will likely have a different tax rate on each of your superannuation accounts.

Warning: Consolidating your superannuation funds may increase the tax you pay when you withdraw your benefits.

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TPD Tax Calculation

The TPD tax calculation applies if you are under your Preservation Age. The time-line below explains how the “tax-free uplift” calculation works. To perform this calculation, you need to know your:

Date of Birth (hopefully you know this one)
Date Last Worked
Super account Eligible Service Date

See below for further detail on these dates. Use our TPD tax calculator and receive a free assessment.

Tax Calculation Time Line

Tax Calculation Put Simply

The future service period becomes the new tax-free component of your superannuation withdrawal
Tax withheld by the superfund will be 22% of the past service period portion of withdrawal.

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John Rozmeta

Andy is extremely approachable and down to earth and extremely knowledgeable in all areas Finance with special regard to TPD Claims. Quick Phone Consult and covered all bases in relation to my claim. Highly Recommend to anyone 6 out of 5 stars.

Mahina Chadwick

I highly recommend TPD Claims Advice for the invaluable information. Andrew's expertise, responsiveness and understanding was exceptional and I am more than happy with the outcome.

B Tadros

Andy is a professional financial advisor, he is very knowledgable, genuine and honest. He takes the time to listen and answer all your financial questions. He has helped me to understand how TPD claims work and now I am able to make the right decisions with my claim. I highly recommend Andy Reynolds and his team at TPD Claims Advise.

Steven Field

I found TPD claims to be very knowledgeable in their field and great advice given. Also a better understanding on how to invest and use my payout

David Watson

Andrew is an expert in his field. Very knowledgeable. Easy to talk to and I walked away confident that I had all of my options and outcomes explained to me .

James Boljkovac

I researched help/advice with TPD. Andy was not on top of the list I received. My TPD claim is life changing so I researched every company I was presented with. I got to Andy Reynolds I was immediately impressed. Andy’s product knowledge and his short videos on TPD stood out so I immediately contacted Andy and have engaged his services. I highly recommend Andy and his team. His product knowledge is impeccable,his communication style is very easy,most of all every part of his advice has proven spot on. I am very thankful that i engaged Andy and as I just said highly recommend his services.

Sarah Brown

Watching the videos that were provided to me well before our consultation made me feel like I was taking control again. My Workers Compensation process was ongoing for almost four years and after being unsuccessful in my return to work, I was dealing with Insurance claims on top of that. That process left me feeling anxious, deflated and defeated. After speaking with Andy, he left me feeling like I was controlling the situation again. He gave me clarity about where I stood financially. Andy’s questions regarding my specific situation were thorough. If you’re feeling lost and you are struggling physically, mentally and financially because of an injury, you can be assured that Andy will alleviate at least one of these problems.

Deborah J

After recently receiving a TPD claim payment into my Super account, I had no idea about the tax implications upon withdrawal so my Lawyer scheduled a meeting for me to speak with Andrew. Andrew was very informative and gave me excellent advice. I will definitely be speaking with Andrew again in the future for further advice regarding my investment options.

Definitions of Dates

Eligible Service Date: This is either the date you started your superannuation account (or when you started with your employer that set up the super account for you), or if you rollover one super account into another, your Eligible Service Date will always be the earlier start date. Again, beware of consolidating super funds! Note, if your employer

Date Last Worked: The ATO explains this date as “the date you stopped being eligible of being gainfully employed”. As you can see, this date is not necessarily black and white, it could be the date the claimant suffered and injury or illness, or it could be the date of employment separation (which in some cases can happen years or months after the initial diagnoses. The “Date Last Worked” that your superannuation fund uses is important and could have a significant impact on your tax calculation.

Warning about Date Last Worked

We see a significant number of errors when superannuation funds are calculating tax payable following a TPD claim.

In almost every case the claimant is over taxed – the most common error we see is to do with your Date Last Worked. In many cases we have seen systematic issues where superannuation funds have used other dates instead, such as “the date the TPD claim was accepted” or the “date the superannuation fund performs the tax calculation”, which in both cases will result in you paying a higher tax than you should.

Exception to the 22% Tax Rule

The above explanation of tax calculations on TPD claims paid into superannuation is correct for 99% of Australians, however, if your superannuation account is a “Defined Benefit” superannuation account, and you have an “Untaxed Element” you may pay a higher rate of tax. Defined Benefit Super Accounts are rare and usually only apply to certain Government superannuation schemes.

What Happens if I am Over-Taxed?

This is a common question, many people ask if their tax withheld can get their tax back on their tax return, this is not the case. Any error needs to be rectified with your superannuation fund as they are the Payor and need to report the correct information to the ATO. We can help you with this if required.

Use our free TPD tax calculator and find out more about the correct amount of tax you should pay.

Preservation Age

Once you are over your preservation age (between age 55 and 60 depending on date of birth), you can draw $210,000 tax-free from the taxable component of your superannuation.

After age 60 all superannuation withdrawals become tax free.

Date of Birth	Preservation Age
Before 1 July 1960	55
1 July 1960 – 30 June 1961	56
1 July 1961 – 30 June 1962	57
1 July 1962 – 30 June 1962	58
1 July 1963 – 30 June 1963	59
From 1 July 1964	60

Minimising Tax

Before you make a full withdrawal of your TPD funds you should understand your options. There are simple strategies you can apply that could potentially save you a significant amount of tax. Get in touch with us if you would like to hear more about whether these strategies would be appropriate for you.

> Contact us now.

Are You Receiving a Centrelink Benefit?

When your TPD claim is approved, there is no impact to your Centrelink benefit if you are under your Age Pension Age (which is between 65 and 67 depending on when you were born). However, when you then go to withdraw these funds this could affect your Centrelink payments. How Centrelink will impact you will depend on which Centrelink benefit/s you are receiving and your broader financial situation. Our TPD Assessment Service will help you understand how your Centrelink benefits may be impacted.

There are also a range of government benefits that are based on your “adjusted taxable income” that can be impacted when you make a withdrawal of your TPD/superannuation benefit. The taxable portion of the withdrawal is included in your taxable income which can impact the following (note, this list is not completed):

Family Tax Benefits, part A & B
Child support arrangements
Commonwealth senior health card
Child Care Subsidy
Dad & Partner Pay

Read more about Centrelink implications here.

Tax Errors

In roughly 30% of cases superannuation funds get TPG tax calculation wrong and almost always over-tax their members

If nothing else, make sure you get your tax calculation checked before you make a decision on what to do.

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