Changes announced Re CGT on Death (Super)

25th Oct, 2012

It has been long known that under Superannuation legislation that the tax free status of super pension funds ceased upon death. However, the ATO had never decided to pursue the matter until it produced a draft tax ruling TR2011/D3 last year which in essence indicated that it would enforce the law (i.e. tax exempt status of super pensions ceased upon death).  The impact of this ruling, if implemented, meant that two levels of tax may apply to a death benefit: any accrued Capital Gains Tax (i.e. all growth assets would need to be sold) and the 16.5% tax when the benefit is paid to a non-dependent.

The other unsavoury aspect of this ruling meant that if one died as a result of an accident/serious illness (i.e. unexpected and sudden) he/she was penalised from a tax perspective .  This is because they could not re-arrange their financial affairs in the same way that someone who is given the opportunity (e.g. diagnosis) could do when they were made aware that they may have a limited time to live. In other words, tax is levied on the basis of what nature throws our way.

Thankfully, the Government in its mid-year review announced that the law will change to allow the situation that has prevailed over many years to remain in force i.e. income from super pension assets to continue to be tax exempt after death of a member up until the death benefit is paid from the fund.

This provides us all with a timely reminder to review our estate plans to ensure that our life’s wealth and assets transfers to those that we love and care for most.  Therefore, we would encourage you to make an appointment as soon as possible to either review or help develop an Estate Plan.

Disclaimer

Opinions constitute our judgments at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Nathan Griffith, Samina Yip and Frank McCall of The Wealth Creation Group Pty Limited are Authorised Representatives ofApogee Financial Planning Limited ABN 28 056 426 932, an Australian Financial Services Licensee, Registered office at 105 –153 Miller St North Sydney NSW 2060 and a member of the National Australia group of companies.

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The Wealth Creation Group and its Financial Advisers are Authorised Representatives of WCG Financial Solutions Limited, Australian Financial Services Licensee 481610, Registered Office at 351 Moorabool Street, Geelong VIC 3220.
Disclaimer: The information contained in this website is of a general nature and has been sourced on good faith as such it should not be construed as personal advice. Whilst the writer has adopted care, diligence and competence, the information has not been prepared taking into account any particular investment objectives, financial situation or particular needs. The Wealth Creation Group and WCG Financial Solutions Pty Limited accept no responsibility for any content contained in external links on other company websites or externally sourced information.