Tax for super inheritance

My brother and I are about to inherit dads money from cbus.I work he doesn’t,is there a way to get it paid out equally from a tax perspective?Ive spoken to the ato and cbus and didn’t get a definitive answer from either, thanks

 

Sorry to hear about the loss.

There are many issues around the amount you get paid and by whom - not all of it will necessarily be as per the will or the direction of the CBUS trustee.

• Was there a binding nomination (and was it current)? This will provide the best indication as to how it will be paid out (either to nominated beneficiaries or to the estate etc)
• Was your father retired ie super in pension mode?

Tax will depend on whether either of you were dependents (dependents won't get taxed on the payment at all, non-dependents are taxed). I've been told to get money out just before the person passes (if it's in pension mode).

You'll need to speak with your accountant and solicitor to work out how best to go about it. (I'm not qualified to give advice)

 

Get some legal advice.

Without a valid bdbn the trustee of the fund will decide who to pay. You can make your case to the trustee. It might even be paid to the estate and then come via the will.

 

I hate to be blunt, but is your dad still alive?

If so, consider withdrawing all the superannuation and put it in the bank. Either by your dad or by whoever has his EPOA. Then no tax payable. As always, get professional advice first.

Apologies if this appears insensitive.
Marg

 

The most it may be taxed is upto 17%. The least amount is 0.

The super balance will contain a taxable component and an untaxed component.

If it is paid to a non dependant adult it is likely the taxable component will be taxed at 17%.

I generally find this site a good source of information .... SMSF Education - Death FAQs | ESUPERFUND

 

Could be up to 32%

 

How can you say that when you dont know his dads age ?

Has the father met a condition of release ?

How do you know if they have an enduring power of attorney or not ? What are the terms of it anyway.

What if his father isnt in full pension phase.

How do you know it isnt a defined benefit fund ?

 

Thanks for the replies so far, not sure about about the binding nomination,moneys to be split 50/50 between us.Dad died from cancer aged 63 earlier in the year( smoker)and was working full time when diagnosed. Thanks for the link Willy1111. Terry W can you please elaborate on the possible 32% tax cheers

 

going to need to know

the tax free component of any lump sum payment
taxable component of any lump sum payment

depending on the proportions tax free component wont be taxed and as @willy1111 says the taxable component taxed no more than 17% including medicare levy

the 32% rate is if there is an untaxed element. common with commonwealth, state and territory public sector funds.

as @Terry_w says a lawyer will need to work out how it is distributed to who.

 

Sorry to hear

What sort of fund was it?
How old are you and the bro?

 

CBUS isn't a DBF.

 

41&33 I’m on the second highest tax rate he’s on the dole bludgers rate hence the original question in my 1st post

 

You may need to consider a lump sum salary sacrifice to your own super to reduce your income (If that works).

 

Adult beneficiaries generally pay 15% tax + 2 % medicare levy on the taxed element of a super death benefit whether its paid directly or through the estate.

One matter to take care with is that medicare levy and the surcharge can BOTH impact if the $$$ received pushes total income over the respective thresholds. The death benefit adds to taxable income but a complex maths issue sees a tax offset to bring the final tax to 15% and then Medicare levy on top of that (2%). The exception is a low income person who may be progressively taxed at a lesser rate BUT they also may end up with the 2% medicare issue PLUS medicare levy surcharge if the sum is large enough. A few exceptions to this apply but generally they only apply to those receiving veterans pensions.

For those who receive defined benefit pensions its even worse. The final tax rate can be as high as 34%+....And non-residents taxed at non-resident tax rates.

I recently found someone also affected by this situation who lost paid parental leave etc. Centrelink assess based on the return on the year prior when there was that death benefit issue. I thought thats a little unfair

It also can mean repayment of the centrelink benefits for your brother

Not all cases of equal entitlements have an equal outcome. You are both likely to receive a equal share I suspect and each will have different final net outcomes

 

Cheers Paul appreciate the info