Section 295 - 485(3) Income Tax Assessment Act 1997 (ITAA 1997) gives a formula to calculate the anti detriment payment deduction as follows:

Tax Savings Amount  /  Low Tax Component Rate

The low tax component rate is the rate of tax imposed on the fund's taxable income, i.e., 15%.

The Tax Savings amount can be calculated by one of two methods for accumulation funds:

1.    Auditor Method: An amount determined and certified by the fund's auditor - Taking into consideration not only the tax paid on contributions but also the income that would have been earned had the taxes not been imposed. Refer Superannuation technical minutes, September 2010.

2.    Formula Method: As prescribed by the Commissioner of Taxation (refer ATO Interpretive Decision  2010/5).

(0.15*P) / (R - 0.15*P) * C

P = The number of days in component R that occur after 30 June 1988.

R = The total number of days in the service period as defined in section 307 - 400 of the ITAA 1997 that occur after 30 June 1983.

C = The taxable component of the lump sum calculated under sections 307 - 120 and 307 - 125 of the ITAA 1997, as if no deduction under subsection 295 - 485 (2) of the ITAA 1997 were allowed, after excluding the actual (if any) insured amount for which deductions have been claimed under sections 295 - 465 or 295 - 470 of the ITAA 1997.