1. Apply the disability tax-free uplift
The single biggest lever. The ATO formula increases your tax-free component using your service days and the days remaining until age 65. Many funds don't apply it automatically — you (or your adviser) need to request it.
2. Time the payment relative to your birthday
Crossing preservation age or 60 can drop your effective tax rate to zero on the taxable component. If payment timing is flexible, even a few weeks can matter. See TPD tax over 60.
3. Split between lump sum and income stream
A partial commutation lets you take cash for immediate needs (mortgage, medical bills) while keeping the rest in a tax-advantaged disability income stream.
4. Recontribute to refresh the tax-free component
For some claimants, a recontribution strategy converts taxable into tax-free dollars — which matters most for estate planning if you have non-dependant beneficiaries.
5. Get a second opinion before signing
Insurers and super funds don't owe you tax advice. A 30-minute review by an AFSL-authorised TPD specialist often uncovers tens of thousands in avoidable tax — and is free.
Estimate your saving
Try the free TPD tax calculator with your figures. If the estimated tax looks high, request a free phone review — most calls take under 20 minutes.