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MSBS Retention Benefit Repayment

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Smeg View Drop Down

Joined: 07/February/2012
Location: Australia
Posts: 1
  Quote Smeg Quote  Post ReplyReply Direct Link To This Post Topic: MSBS Retention Benefit Repayment
    Posted: 07/February/2012 at 19:17
I am a serving Defence member under the Military Super Benefit Scheme (MSBS). At 15 years of service members are entitled to a Retention Benefit if the Rank of Sergeant (for enlisted ranks) or Major (or equivalent for Commissioned Officers). The intent is for the member receiving this Retention Benefit to continue a further 5 years of service.
If you choose to terminate service voluntarily or through disciplinary actions, the current policy is that the member is required to repay the pre-taxed amount of the benefit based on a pro rata of service remaining under the Retention Benefit Scheme.
My question is how can a member be forced to repay monies which were taxed and never seen by the member?
Wouldn't these monies be sought by MSBS for reimbursement from the ATO?
Is it possible that the Scheme is double dipping? That is forcing members who decide to terminate service prior to the additional 5 years service under the Retention Benefit to pay back taxes already paid by the member then seeking reimbursment again from the ATO?
If a member seeks to change careers and depart the Defence Force, the reapyment bill can easily be more than what the member received in their bank account. How is this possible, or even legal?
Are there any avenues to deal with this?
Please advise?

Thank you in advance.

MartinO View Drop Down
Moderator Group
Moderator Group

Joined: 02/March/2009
Location: Australia
Posts: 13999
  Quote MartinO Quote  Post ReplyReply Direct Link To This Post Posted: 07/February/2012 at 19:35
Hope someone can help you but this is rather a spec ialist area that even an ordinary accountant would have difficult with I would imagine. Not even sure who to advise you to seek advice from, perhaps others can assist here, please check back.
I am NOT a lawyer. Anything said is NOT legal advice.

Please post your legal questions in a forum rather than sending a PM. Thanks.

Unlawful View Drop Down

Joined: 28/June/2012
Location: Australia
Posts: 1
  Quote Unlawful Quote  Post ReplyReply Direct Link To This Post Posted: 28/June/2012 at 00:22
Being an ex-military member and having taken this benefit I undertook a lot of research into this particular issue. What you have to understand is that the military along with MSBS wants to make it difficult for the member to reneg on the member taking the benefit so they have put the liability on to the member to pay back the whole amount (pro-rata over time) and then the member to apply to the tax office for reimbursement.    At the time I also spoke to the ATO who said the tax implications were with the individual.    
I am not a lawyer.    

willdirk View Drop Down

Joined: 17/February/2016
Location: Australia
Posts: 1
  Quote willdirk Quote  Post ReplyReply Direct Link To This Post Posted: 17/February/2016 at 20:50
This is a simple situation, although to many it may seem challenging. At the 15yr point you elect to undertake a further 5 yrs service. You got a full years salary and service allowance paid. This is taxable. Should your circumstances change, and you cannot or do not wish to serve the agreed 5 yrs, than you are required to repay a pro-rata amount of the original benefit back to Defence. What about all the tax you say. Simple. You submit an amended tax return for the year to received the lump sum. This will correct the tax paid to be based on the new pro-rata lump sum payment.

I laugh at the comment above saying Defence and MSBS are making it difficult to reneg on the benefit and correct the tax. This process is simple, and always has been. The idea of a "RETENTION BENEFIT" is to RETAIN people.

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