What are private pensions and annuities?
An annuity is a series of payments usually purchased with a lump sum payment from a life insurance company.
A pension is a series of regular payment made as a superannuation income stream. These payments include those paid
- by an Australian superannuation fund, life assurance company, or retirement savings account (RSA) provider
- by a fund established for the benefit of Commonwealth, state, or territory employees and their dependents
- while you were still working
- as a result of someone’s death
In this case, a pension does not include the government’s ‘age pension.’
Most pensions and annuities include both taxable and tax-free components. The tax-free components are non-assessable non-exempt income. Though they may be shown on your PAYG payment summary, they do not need to be reported on your tax return. The taxable component, however, must be declared on your return.