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Walshs are leading financial advisors in Brisbane, providing accounting and strategic financial planning advice.

T: 61-7-3221 5677
Email: E : enquiries@walshs.com.au

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Level 24/10 Eagle Street, Brisbane QLD 4000

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Super death benefit
Thursday, 25 October 2018 / Published in Walshs Blog

How is the super death benefit taxed?

When it comes to how the super death benefit is paid out, there are specific tax implications involved which affect the amount a nominated beneficiary will receive.

In a situation where super is paid out after an individual has passed, it is generally split up into two components; taxable and tax-free. The tax-free portion of a super death benefit is tax exempt and can include payments of after-tax contributions and government co-contributions. While the taxed component is primarily made of employer contributions, personal contributions (when a tax deduction is claimed) and salary sacrificed contributions.

Upon receiving a super death benefit, the amount of tax you as the beneficiary will be required to pay will depend upon your age and a number of considerations.

These include:
• The deceased individual’s age at the time of their passing
• If the super fund has already paid all tax owing on the taxable component
• Whether the income stream is account-based or a capped defined benefit income stream
• Whether you are the dependent of the deceased individual (i.e., you rely on their financial support)
• If it is paid out in one payment or as an income stream

The Australian Tax Office (ATO) does not require you to pay any tax on the taxable component of a super death beneft you receive when you are a dependant of the deceased individual and receive the payment as a lump sum. However, varying rates may apply (depending upon the above considerations) if you accept the balance of the benefit as an income stream.

In cases where you are not a dependent of the deceased individual, you will receive the balance of the benefit in one payment. The taxable component of the amount will be taxed at your marginal tax rate. However, you may have this rate reduced providing you are eligible for tax offsets.

If you have any questions about how the super death benefit is paid out, make an appointment to see the Walshs team– you can now book online here – or call Walshs on 07-3221 5677.

As this advice is general in nature please do not hesitate to contact one of our adviser accountants or financial planning advisers if you have a query that is specific to your circumstances.

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Tagged under: Superannuation, Taxation

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About Walshs

Walshs Practice was established in 1991 and has grown to become one of South East Queensland's leading accounting and financial planning firms. Walshs encompasses tax and accounting services, business structuring, wealth advice, business services, superannuation and retirement planning, finance, insurance, lending and estate planning all under one roof.

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All advice on this site is general in nature and does not take into account your personal circumstances. Please do not hesitate to contact one of our adviser accountants or financial planning advisers if you have a query that is specific to your circumstances.
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