A military invalidity pension is a regular Defence superannuation payment for Australian Defence Force members who are medically unable to keep serving because of injury or illness.
A military invalidity pension is an invalidity pension granted after 1 September 2007 and paid under either:
- the Military Superannuation and Benefits Scheme
- the Defence Force Retirement and Death Benefit Scheme.
The Douglas decision
A Federal Court decision in 2020, known as the Douglas decision, changed how some invalidity pensions were treated for tax purposes. While these changes may affect your taxable income, they don’t affect how income support payments are assessed under social security law.
The Government amended the Social Security Act in May 2024 so invalidity pensions continue to be assessed the same way for income support. This means the Douglas decision doesn’t change how we assess your payment.
How we assess military invalidity pension
We assess military invalidity pension payments as income streams. These payments:
- are exempt from the assets test
- are assessed under the income test
- use the gross payment, minus a special reduction amount based on the tax-free component that applies to superannuation income streams, not superannuation lump sums.
What you need to do
Tell us about any changes to your military invalidity pension or your income. This helps us make sure your payments are correct.
This includes if a medical review of a military invalidity pension results in either of the following:
- you or your partner get lump sum arrears
- your or your partner’s payment rate changes.
You also need to tell us if your taxable income changes. This is important if you get payments that use your taxable income to assess how much you can get or if you’re eligible.