Blog

Do you have to pay tax on super death benefits?

0
Do you have to pay tax on super death benefits?
Do you have to pay tax on super death benefits?

When someone dies, their superannuation usually gets transferred to their beneficiary as superannuation death benefits. Depending on who the beneficiary is, the benefits may be taxed in some circumstances.

If you are a beneficiary, the amount of tax you pay depends on factors such as:

  • If the benefit is paid as a lump sum or pension.
  • Your age and the age of the deceased at the time of their death (for income streams).
  • Whether the benefit is paid from an untaxed superannuation scheme or a taxed scheme.
  • Whether you’re a dependent for tax purposes.

Someone who is tax-dependant will:

  • A spouse of the deceased.
  • An underage child of the deceased.
  • Someone who was financially dependent on the deceased at the time of their death.
  • Someone who was in an interdependency relationship of the deceased at the time of their death.

Lump sum payments
Lump sum super benefits paid to tax-dependant beneficiaries are not taxed, whereas those who are not tax-dependent will need to pay more tax and will only be able to receive the benefit as a lump sum. Not all super death benefits paid to a non-tax dependant are subject to tax. There are tax-free components that are made up of contributions after-tax that the member made to their super.

The taxed element (where the member paid tax in their super) of the taxable component of the benefit is subject to a maximum tax rate of 15% plus the Medicare levy. The untaxed element (where the death benefit is being paid from an untaxed super fund or includes proceeds from a life insurance policy held by the fund) of the taxable component of the benefit is subject to a maximum tax rate of 15% plus the Medicare levy.

Income stream payments
If the death benefit is paid in the form of an income stream, the tax treatment of the payment is dependent on the age of the deceased and beneficiary at the time.

If the deceased or the beneficiary is aged 60 or over at the time of the benefactor’s death and the super is paid from a taxed super fund, then the payment will not be taxed. If the age of the deceased and the age of the beneficiary are both under 60, the taxable portion of income stream payments will be treated as assessable income but will be entitled to a tax offset equal to 15% of the amount.

Taking a super pension

0
Taking a super pension
Taking a super pension

Once you have met your preservation age (between 55 and 60 depending on when you were born), you can choose to take a super pension. There are six main types of super pension:

  • Account-based pension: this is the most common type of pension. It is a regular income stream bought with money from your super when you retire.
  • Transition to retirement pension (TTR): you can use this pension if you have reached your preservation age but are below 65 years old and still working,
  • Defined benefit fund: with this pension, you are paid a guaranteed income stream for life, however, it is not commonly used.
  • Annuities: this is a series of payments you receive at fixed intervals for a defined period or the remainder of your life. Annuity payments are purchased with a lump sum.
  • Reversionary pension: this is an income stream you set up with your superannuation that automatically reverts to someone else (generally your partner) when you die.
  • Death benefit pension: this is where your dependents receive your death benefits as a pension when you die. This is only available from some super funds.

The standard conditions of release for super pension withdrawals are:

  • Retirement.
  • Turning 65 years old.
  • Beginning a transition to a retirement income stream.
  • Ceasing an employment arrangement after you turn 60, regardless of if you get a different job.
  • Becoming permanently incapacitated.
  • Being diagnosed with a terminal medical condition.

The amount you withdraw can have an impact on any Age Pension entitlements you have, so be aware of these implications when deciding to withdraw an amount. You should also be aware of the transfer balance cap of $1.6 million that you’re allowed to move to an account-based pension. For super pension income streams, you generally need to transfer funds from your accumulation account to your retirement account for your pension.

Things to consider before rebranding your business

0
Things to consider before rebranding your business
Things to consider before rebranding your business

Rebranding your business can seem like a daunting task, as it can involve a range of arduous tasks such as changing designs, updating clients, retraining staff and changing your marketing strategies.

However, rebranding can be an option for many businesses if:

  • Your business is too similar to competitors.
  • Your designs and values are updated.
  • You want to outgrow a poor reputation.
  • Your business is growing and changing.
  • You want to tap into a new demographic.
  • The market is changing.

To make the task of rebranding seem less daunting, consider these tips before starting to help you in your process.

Evaluate your need for rebranding
Make sure that the reason for your rebranding is valid and don’t act on impulse decisions. Rebranding can take a lot of time and resources and can often decrease your business if not done successfully, so it is important that you evaluate if rebranding is right for your business and outline the reasons why. It can be helpful to talk to staff about it to get ideas from people who are also invested in the success of your business.

Plan a budget
Before you rush into rebranding your business, make sure you have the funds to do so. Research and estimate how many resources will go into different areas of rebranding, e.g. marketing, website design, training staff etc. and outline a budget that can help you manage your finances through the process.

Have a strategy
Before you start rebranding, plan out a strategy that will guide you in the process and can increase the chances of success. This will help the process run more smoothly and prevent unexpected challenges that could detriment your business.

Solidify your mission and values
Having a clear understanding of the mission and values you want your business to have going forward can help you make important branding decisions and help build the foundation for your new brand. Having you and your staff on the same page with the business mission and values can improve efficiency and motivation when working on the rebrand.

Pin It on Pinterest

Share This