The Sneak “Death Duty” on Super


We asked Boyd Hain Accountant of Hain Accountants ( to provide a little insight here which may be a very surprising read…….

When people, being super fund members, reach his/her preservation age, retire and begin to draw a super pension, the earnings in his/her super as well as the pension paid from the super fund is tax free. They may decide to later commute that pension and take the balance as a lump sum, that is also tax free. However, the rules get more complex on the death of the member.

The member may make a binding death benefit to their spouse, infant child, or a person financially dependent on the deceased or leave them a reversionary pension. This is done via the fund itself and is tax free.

Also, if a member leaves his/her superannuation to their estate, or their legal personal representative, that payment is tax free if the beneficiary of the estate is the member’s spouse, infant child or is financially dependent on the deceased.

Examples of persons financially dependent on a deceased are a 20 year old university student being supported or a disabled adult child.

If a person does not have a spouse and leaves his/her super to an adult child, either as a binding death benefit nomination through their super fund or via his/her estate, then that is taxable.

However, if a person withdrew all his/her super as a lump sum 2 weeks before they passed away and then left it to his/her adult children via their will, then that is tax free.

These are the sort of sneaky traps that may catch the unwary and can cost up to 32% of the deceased’s super just in taxes.

Recent changes to superannuation laws have also resulted in the tax payable on superannuation left to non-dependents rising from 30% to 32%.

Careful Estate Planning is very important to ensure your loved ones receive what you intended for them to receive.  What you think may be obvious is not always the case.  We strongly urge you to regularly check your Will and ensure it is up to date with your current wishes.  Always talk with a professional to get the best advice.  Call RobertsLaw on 07 5530 5700 to make an appointment for advice.