The government found that, before last year’s budget, some superannuants were using a loophole to reduce their tax obligations on their superannuation income streams by electing to treat their income as a series of lump sum payments.

As part of the 2016 federal budget, the government announced this loophole would be closed. The government said there were no military invalidity pensioner or military personnel using this strategy at this time.

Since then, according to Minister for Revenue and Financial Services Kelly O’Dwyer, a “small number” of military invalidity pensioners decided to change their arrangements to utilise the strategy and reduce their tax obligations prior to its closure.

Since September 2016, around 390 out of 11,800 military invalidity pension recipients have acted similarly.

“None of the individuals who elected to access the loophole will be subject to any back payment of tax, however they will no longer be able to use the loophole from 1 July 2017,” said a statement from Ms O’Dwyer’s office.

“This change only impacts the way benefits provided by the Commonwealth Superannuation Corporation are treated, not benefits provided by the Department of Veterans’ Affairs.”