External
- An assessable lump sum redemption payment is subject to tax instalment deductions. Pursuant to subsection section 6-5 of the Income Tax Assessment Act 1997, the ATO confirms that, apart from the exception detailed at paragraph 6 below, lump sum redemption payments are assessable because they are an 'income substitute'.
- The exception: The ATO has advised us not to tax that component of section 137 lump sum payments calculated using the formula at sub section 137(4) i.e. the amount for the period from age 65. The ATO does not consider this portion to be an 'income substitute'. Rather, it is a payment for loss of earning capacity and, as such, is not an assessable lump sum.