Question

Income stream: superannuation money deductible amount Petra is 59 years old and has $700,000 in superannuation money. This includes a tax free component of $200,000 and a taxed superannuation component of $500,000. Petra takes her $700,000 to an income-stream provider and the provider agrees to pay her $54,322 p.a. for the next 25 years. What will be Petra’s assessable income for tax purposes? Will Petra is entitled to a tax rebate?

Answer 1

Petra's assessable income

Deductible % = Tax free component / Total amount equals tax free percentage = $200,000 / $500,000 = 29%

Deductible amount = Total income per annum * deductible %

= $54,322 * 29%

= $15,521

Assessable income = Total income per annum less deductible amount

= $54,322 - $15,521

= $38,801

Tax rebate

Yes. When the income streams are funded with taxed superannuation money where the person is less than 60 years of age then the person is eligible for a 15% rebate.

$38,801 * 15% = $5,820