The Full Federal Court decision in December 2020, Commissioner of Taxation v Douglas (Douglas decision) found that military invalidity superannuation pensions payable under the Defence Force Retirement and Death Benefits (DFRDB) scheme and the Military Superannuation and Benefits (MSB) scheme commencing on or after 20 September 2007 are to be taxed as superannuation lump sums, rather than superannuation income streams.

The Government announced on 25 July 2022 that it would introduce legislation to ensure that no veteran pays higher income tax because of the Federal Court decision. A draft bill, Treasury Laws Amendment (Measures for a later sitting) Bill 2022: Taxation of military superannuation benefits, and associated draft explanatory material, was released for public consultation between 25 July and 5 August 2022. The legislation was subsequently introduced into Parliament in November 2022.

The draft legislation:

  • Maintains the benefits of the Douglas decision for invalidity benefits and death benefits for beneficiaries of invalidity pensions paid from the DFRDB and MSB schemes that commence on or after 20 September 2007, and otherwise retrospectively and prospectively reverses the effect of the Douglas decision in relation to all other schemes consistent with the intent of the current superannuation tax law
  • Introduces a non-refundable tax offset to prevent any adverse income tax outcomes for veterans in the DFRDB and MSB schemes that are affected by the retention of the Douglas decision. This will reverse higher end of year tax liabilities that would have occurred for some of these veterans and enable the ATO and CSC to include the impact of the new offset in determining fortnightly tax withholding, in order to address higher withholding that has occurred due to the Douglas decision
  • Extends these changes to Spouse and Children’s pensions paid to a spouse or child following the death of a member of a DFRDB or MSB scheme affected by the Douglas decision to ensure these beneficiaries are no worse off

The draft legislation confirms the lump sum tax treatment for affected members of the DFRDB and MSB schemes. The Government’s approach means that affected veterans in the DFRDB and MSB schemes will not only retain the income tax benefits of the Douglas decision but also retain the resulting benefits of changes in their taxable income, such as Family Tax Benefit entitlements and the childcare subsidy. 

The draft legislation reflects the Government’s commitment to ensure veterans are not left worse off due to the Douglas decision and that veterans who benefited from the decision retain these outcomes.

The Information on this website will continue to be updated as the legislation is progressed.

Where to go for assistance

Commonwealth Superannuation Corporation

General information on this issue is available here:

For queries on how your pensions is being administered

Phone: 1300 001 877


Australian Taxation Office (ATO)

To be provided with more tailored information to your current year tax situation and options to review previous years, please go to

Department of Veterans’ Affairs (DVA)

For information about your military invalidity taxation and any impact it may or may not have on your Department of Veterans’ Affairs (DVA) entitlements.

Phone: 1800 VETERAN (1800 383 372)

Services Australia (SA)

For information on any impact this may or may not have on your payments administered by Services Australia

Phone: 13 6150 for Family Tax Benefits and Child Care Subsidy
Phone: 13 1272 for Child Support

Additional Support

  • If you are a veteran and this matter is causing you distress contact Open Arms for support on 1800 011 046
  • The Department of Veterans’ Affairs (DVA) provides a range of benefits to support an injured veteran financially after discharge from the ADF. Additionally, there is a broad range of programs in place to facilitate a veteran’s wellness, recovery and rehabilitation after their service
  • For serving members, you can contact your local Garrison Health Centre, the All Hours ADF support line on 1800 628 036 or the Defence Family Helpline on 1800 624 608
  • Lifeline is available for any Australian experiencing emotional distress on 13 11 14

Financial Assistance

  • The ADF Financial Services Consumer Centre helps ADF members and their families achieve greater financial security by providing independent, professional financial education (not advice) to ADF members throughout their careers
  • The Financial Information Service (FIS) through Services Australia provides free, independent and confidential information, tools and resources to help customers make informed decisions about their current and future financial needs. FIS doesn’t provide financial advice, counselling, or advocate or promote particular products or providers
  • Moneysmart offers financial guidance for all Australians, including tools, tips and calculators to help people of all ages, backgrounds and incomes to build a better life
  • Commonwealth Superannuation Corporation (CSC) offers ‘fee for service’ financial planning services, including access to certified financial planners for fund members

For more information go to our FAQs page.