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Re: Tax on Super Death Benefit

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I'm new

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I am an administrator of an Estate.  All that needs to be sorted now is the distribution of the deceased superannuation to 2x beneficiaries (2x adults) who have always lived in NZ which I am aware have a double tax agreement with Australia.

Can I just distribute the money to the beneficiaries and they take responsibility to declare and pay their portion of taxes in New Zealand?  As an administrator of an estate would I have to pay the tax if they don't?

One beneficiary is wanting payment asap and stated she is prepared to sign a declaration that she will take ownership and responsibility of paying the tax for the super she receives.  the amount is below 10k

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Devotee Registered Tax Practitioner

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Can I just distribute the money to the beneficiaries and they take responsibility to declare and pay their portion of taxes in New Zealand?

 

No.  The deceased estate must lodge a tax return and pay whatever tax is assessed.

Explained here:

https://www.dbalawyers.com.au/smsf-strategy/demystifying-tax-treatment-death-benefits-paid-estate/

 

As an administrator of an estate would I have to pay the tax if they don't?

 

Executor is reponsible for paying any tax assessed to the estate, so if you pay out all the funds without providing for tax then you will be personally responsible.

 

One beneficiary is wanting payment asap and stated she is prepared to sign a declaration that she will take ownership and responsibility of paying the tax for the super she receives.

 

You cannot contract out of a statutory obligation  =  fancy words that mean that executor cannot escape responsibility.

 

 

2 REPLIES 2
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Most helpful response

Devotee Registered Tax Practitioner

Replies 0

Can I just distribute the money to the beneficiaries and they take responsibility to declare and pay their portion of taxes in New Zealand?

 

No.  The deceased estate must lodge a tax return and pay whatever tax is assessed.

Explained here:

https://www.dbalawyers.com.au/smsf-strategy/demystifying-tax-treatment-death-benefits-paid-estate/

 

As an administrator of an estate would I have to pay the tax if they don't?

 

Executor is reponsible for paying any tax assessed to the estate, so if you pay out all the funds without providing for tax then you will be personally responsible.

 

One beneficiary is wanting payment asap and stated she is prepared to sign a declaration that she will take ownership and responsibility of paying the tax for the super she receives.

 

You cannot contract out of a statutory obligation  =  fancy words that mean that executor cannot escape responsibility.

 

 

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Community Support

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Hi @Just_Wanna_Know,

 

When Super is paid directly to an estate generally the estate declares it and withholds tax as if it were paid directly to the beneficiaries. Medicare levy is not applied as the estate is a non individual. If it is paid directly to the beneficiaries they will need to declare it and Medicare levy will be applied. Tax on a Lump sum death benefit is worked out using the proportioning rule. This information is available on our website via the link.

 

Hope this helps.