Superannuation: Removal of the work test and associated planning benefits
Those aged 67 to74 are not required to meet the work test when making or receiving non-concessional or salary sacrificed superannuation contribution
October 18, 2016
Death is one of those topics most of us like to avoid, but unfortunately, nothing is certain in life but death and taxes. Here, we answer some of the common questions about what happens to your super when you die.
The super fund trustee normally pays your death benefit (your super account balance plus any insurance) to one or more of your dependants, or to your estate. ‘Dependants’ include:
You can nominate who you want your death benefit paid to, either as a non-binding or binding nomination.
If you don’t nominate a beneficiary, the fund trustee will use their discretion to decide who receives your money.
Usually it’s done during the application process, but you can often do so online.
With these, the trustee is obliged to pay your benefit to your nominated beneficiaries, as long as the nomination is still valid (usually they are valid for three years).
You can nominate one or more of your dependants or your legal representative, so that the money is distributed according to your will.
If you know for certain whom you would like to benefit, making a binding nomination is a good idea.
These are used as a guide by the super fund trustee, but they still have the final say. Preference will be given to those who are financially dependent on you. If your circumstances could change in future, a non-binding nomination may be best.
Dependants can receive the death benefit as either a lump sum or income stream, non-dependants must be paid as a lump sum. If you believe you are entitled to a death benefit, contact the fund directly.
Dependants do not pay tax on a death benefit if it’s received as a lump sum, while different tax rates apply to payments made via an income stream. Non-dependants receiving a lump sum generally pay tax on the taxable component at the lower of their marginal tax rate or 17%. Tax offsets may apply.
Do you find managing your super overwhelming? Don’t have the time to research all the ins and outs? LDB is highly experienced in superannuation and can help answer all your super-related questions.
To find out more about superannuation, please get in touch with LDB by calling (03) 9875 2900 or filling in the contact form below.
Those aged 67 to74 are not required to meet the work test when making or receiving non-concessional or salary sacrificed superannuation contribution
Having a regular source of income in retirement, such as an account-based pension, can offer financial security and peace of mind.
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