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I am wondering how tax works with deceased estates. In particular taxing super annuation balances and insurance. My Dad died this year and my family and I have been given the option of transferring the money to us directly or to transfer it to the estate, as we haven’t yet sold his house and it’s in trust. We’ve been told that if we transfer the balance of super annuation and insurance we will be charged up to 17% and up to 37% respectively for the money. Just wondering which way we’re better?
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Hi Sarah,
Taxation of superannuation depends on the tax components of the superannuation and whether the beneficiaries are dependents or non dependents under the SiS act. If you are not dependents, and there is insurance proceeds, then you are likely to pay 17% and 32% (and possibly 0%) on the various components.
Whether it is paid to you directly from the super fund, or via the estate and then to you, won't change how much tax is paid. It is calculated the same and is determined by the final recipient and whether they are dependent or non dependent.
Cheers
Glenn
Hello Sarah,
this is a VERY complicated area of superannuation and tax legislation. The answer to this may well be exactly what Glenn has told you, but you need to get in front of a taxation and super expert as soon as you can to see what options are really available to you.
the most common arrangement with death benefits is that they go to the spouse tax free, but I presume your mother has already passed away. It boils down to what the superfund MUST do with the proceeds, or what discretion it MIGHT have in paying the benefits to family members. There MIGHT be scope for benefits to be paid out of the fund tax-free......but you will need to talk to an expert in BOTH tax and super to get the right answers......even then those answers may not be the ones you are hoping for.
You’re right, it’s VERY complicated. I appreciate your time. We’re mostly wondering if there’s any benefit to transferring this money to the estate instead of directly to us. We don’t really understand capital gains tax and assume this is what would apply if we transfer to the estate. So confusing lol
This is why you need to talk to an expert Sarah. On the face of things I cant see any CGT applying to super death benefits paid out of a fund......or any tax other than death benefits tax if your father was retired.
Get yourself in front of a CA or CPA with runs on the board with estates, super and income tax......and I presume it wont be super cheap...but the potential costs (or potential savings) could far outweigh the accounting fees.
good luck
bc
Hi Sarah, if you want any assistance, please get in contact. glenn@precisionwm.com.au. Cheers, Glenn