ATO Community

Superannuation paid to LPR

Ask a question

I'm new

Views 120

Replies 1

Hi, 

If the deceased left a valid BDBN to the LPR of the Estate, the Executor would ultimately distribute the benefits according to the instructions under the Will. If the beneficiaries under the Will were death benefit (tax) dependents, the ATO will seemingly look through the Estate and those beneficiaries should receive the superannuation as a tax-free lump sum. My question is, does the relevant Superannuation fund withhold the tax prior to depositing same into the Lawyer's trust account (as they are not to know the intended recipient is a tax dependent) and is the tax withheld at the maximum rate of 15% (taxed element) + Medicare Levy? If so, are those tax dependent beneficiaries entitled to a tax credit for any tax withheld by the Superfund, given they are entitled to benefit from the death benefit as tax free (S 302-10 ITAA 1997) and would not have paid tax if the BDBN nominated them directly, rather than paying into the LPR first. 

1 ACCEPTED SOLUTION

Accepted Solutions
Highlighted

Best answer

Devotee Registered Tax Practitioner

Replies 0

My question is, does the relevant Superannuation fund withhold the tax prior to depositing same into the Lawyer's trust account (as they are not to know the intended recipient is a tax dependent) and is the tax withheld at the maximum rate of 15% (taxed element) + Medicare Levy?

 

No tax to be deducted from benefit if super benefit paid to LPR.

Tax paid by estate according to status of recipient  -  also, medicare levy does not apply when super paid through estate.

 

If so, are those tax dependent beneficiaries entitled to a tax credit for any tax withheld by the Superfund

 

Tax is only paid by estate if it has to be paid, and it is a final tax  -  so nothing to be declared by recipient whether taxfree or not in estate.

 

1 REPLY 1
Highlighted

Best answer

Devotee Registered Tax Practitioner

Replies 0

My question is, does the relevant Superannuation fund withhold the tax prior to depositing same into the Lawyer's trust account (as they are not to know the intended recipient is a tax dependent) and is the tax withheld at the maximum rate of 15% (taxed element) + Medicare Levy?

 

No tax to be deducted from benefit if super benefit paid to LPR.

Tax paid by estate according to status of recipient  -  also, medicare levy does not apply when super paid through estate.

 

If so, are those tax dependent beneficiaries entitled to a tax credit for any tax withheld by the Superfund

 

Tax is only paid by estate if it has to be paid, and it is a final tax  -  so nothing to be declared by recipient whether taxfree or not in estate.

 

Top Solution Authors