How much tax is paid on my super if I die?
It dependes on binding nominations and whether paid to dependants or non-dependants.
Tax on benefits paid on death
Your superannuation benefits are held in trust by the trustees of your fund. They own them but will probably pay the benefits to your estate if their is no binding nomination and to the beneficiaries you nominate if there is a binding nomination.
If paid to the estate the executors pays tax on behalf of the beneficiaries as if the benefit had been paid directly to the beneficiaries (Medicare is excluded).
Death benefits paid to a dependant
A dependant is;
- A surviving spouse or de facto spouse
- A former spouse or de facto spouse
- A child of the deceased under 18 years.
- Someone otherwise financially dependent on, or had an interdependency relationship with, the deceased.
Death benefits paid as a lump sum
Super benefits paid to a dependant as a lump sum are tax-free.
Death benefits paid as an income stream
If either the beneficiary or deceased is over 60;
- No tax is paid on the taxed element
- The untaxed element is added to assessable income with a 10% tax offset.
If neither the beneficiary nor deceased is over 60;
- 15% is paid on the taxed element
- The untaxed element is added to assessable and taxed at marginal rates.
Beneficiaries under 25 years old who started receiving a death benefit as an income stream after 1 July 2007 must stop the income stream and commute remaining benefit to a lump sum on or before the date they turn 25. The lump sum is tax free.
Death benefits paid to a non-dependant
Non-dependants can only receive death benefits from super as a lump sum.
The effective rate a non-dependant will pay on the taxable portion is;
- The taxed component will be taxed at the beneficiaries marginal tax rate or 15% whichever is lower (plus the Medicare).
- The untaxed component will be taxed at the beneficiaries marginal tax rate or 30% whichever is lower (plus the Medicare).
Your member statement will identify the taxable, tax-free portions as well as the taxed and untaxed components.