Tax Tip 312: Ex-Spouses and Taxation of Superannuation Death Benefits

Discussion in 'Accounting & Tax' started by Terry_w, 25th Sep, 2020.

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  1. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Tax law and Superannuation law differ slightly in that an ex-spouse is not a SIS Act dependant but is a Tax Act dependant.

    This means that you cannot leave your super directly to an ex-spouse but if you did leave to them indirectly via having the benefits paid to your estate and then out, via your will, to the ex-spouse they will be able to receive the benefits and be taxed on it as if they were a ‘dependant’ – making it all tax free

    S 302-60 ITAA97 INCOME TAX ASSESSMENT ACT 1997 - SECT 302.60 All of superannuation lump sum is tax free

    S 302-195 ITAA97 INCOME TAX ASSESSMENT ACT 1997 - SECT 302.195 Meaning of death benefits dependant


    This seems to be an usual unintended consequence of how the legislation was drafted.

    See my next tip which is on a strategy to save tax by leaving the super to an ex-spouse:
    Tax Tip 313: Strategy for Single Person to Save Tax on Super at Death
     
    Terry_w, 25th Sep, 2020
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