• 157 Online
  • 23473 Members
  • 27726 Posts

ATO Community

Super Death Benefit

Ask a question

Newbie

Views 476

Replies 3

My wife and I are on a pension , part government, part private and pay no tax on it , however we have now received a super death benefit . I am the administrator of the deceased's estate, and would like to know the likely tax payable on this sadly unexpected financial sum.

Thank you

1 ACCEPTED SOLUTION

Accepted Solutions

Best answer

Moderator

Replies 0

Hi @Archie17,

 

Thanks for getting back to us.


If a super lump sum death benefit is paid to the deceased estate, the super lump sum is taxed in the estate’s tax return.  The super fund won’t withhold any tax from the lump sum payment when it's paid to the trustee of the deceased estate, but they will provide the estate with a payment summary.

 

The payment summary will show the breakdown of the tax-free and/or taxable component the lump sum is made up of.  It will also show the payment was made to the estate (this is shown as ‘Type of death benefit’ in section B on the payment summary). 

 

The tax payable by the estate is based on:

  • whether the beneficiaries are dependants or non-dependants, and
  • the taxed and/or untaxed elements of the lump sum's taxable component.

 

As you mentioned, you and your wife are non-dependants, so the taxable component of the lump sum is subject to:

  • 15% tax on the  taxed element and
  • 30% tax on any untaxed elements.

 

As the estate is required to declare the super lump sum and pay the tax in its tax return, you don’t need to include the amount distributed to you in your individual tax returns.

 

Thanks, NicM.

3 REPLIES 3

Moderator

Replies 2

Hi @Archie17,

 

Welcome to the Community.

 

Thanks for taking the time to write to us.

 

So that we point you in the right direction, we’d like to clarify who the super death benefit was paid to - was it paid to you and/or your wife as a dependant or non-dependant, or was the death benefit paid to the trustee of the deceased estate?

 

Thanks, NicM.

Newbie

Replies 1

I was granted Letters of Aministration, so the benefit went to the estate , however 

the benefit was paid to my wife and I , as next of kin , (we are non-dependant).

Best answer

Moderator

Replies 0

Hi @Archie17,

 

Thanks for getting back to us.


If a super lump sum death benefit is paid to the deceased estate, the super lump sum is taxed in the estate’s tax return.  The super fund won’t withhold any tax from the lump sum payment when it's paid to the trustee of the deceased estate, but they will provide the estate with a payment summary.

 

The payment summary will show the breakdown of the tax-free and/or taxable component the lump sum is made up of.  It will also show the payment was made to the estate (this is shown as ‘Type of death benefit’ in section B on the payment summary). 

 

The tax payable by the estate is based on:

  • whether the beneficiaries are dependants or non-dependants, and
  • the taxed and/or untaxed elements of the lump sum's taxable component.

 

As you mentioned, you and your wife are non-dependants, so the taxable component of the lump sum is subject to:

  • 15% tax on the  taxed element and
  • 30% tax on any untaxed elements.

 

As the estate is required to declare the super lump sum and pay the tax in its tax return, you don’t need to include the amount distributed to you in your individual tax returns.

 

Thanks, NicM.

Top Solution Authors