Money

The Death Tax

Noel Whittaker
Noel Whittaker

RECENTLY I've received a number of emails asking about the death tax of 16.5 per cent on the taxable portion of a superannuation payout that is left to a non-dependant.  In this context, a spouse is always a dependant, whether they are working or not.

One way to lessen the death tax is to reduce the taxable portion of your super.  This is usually done by withdrawing funds once you reach 60 when withdrawals become tax free, and then re-contributing them as non-concessional contributions.  Advice should be taken as there are heavy penalties for exceeding the caps, and it is not possible to do this once you reach 65 unless you can pass the work test.

Recently I recommended to a reader that they simply withdrew their superannuation tax free prior to death as this would avoid any death tax that would be payable on it but they wondered how this could be done in view of the fact that few people know the date they are going to die.

It's important to understand that the main purpose of superannuation is to save tax.  Therefore, if you are thinking about moving your superannuation to cash you should ask your accountant or adviser to calculate what your tax position would be before and after the transaction was completed.  If the amount in superannuation was relatively small you may well find that there is no benefit in retaining the money in super.

Once the money leaves super it becomes part of your estate and can be bequeathed to whom you choose in terms of your will.  If you believe there may be arguments between the beneficiaries you could always invest the money in insurance bonds - they cannot be challenged under the will.

Noel Whittaker is a co-founder of Whittaker Macnaught Pty Ltd.  His advice is general in nature and readers should seek their own professional advice before making any financial decisions.  His email is noelwhit@gmail.com

Topics:  noel whittaker, superannuation, tax




DEX Sports quotes of the week

Australia's Zoe Buckman competes in the Women's 1500m heats, at Hampden Park during the XX Commonwealth Games, in Glasgow, Scotland, Monday, July 28, 2014. (AAP Image/Dan Himbrechts) NO ARCHIVING, EDITORIAL USE ONLY

"WHEN I first saw her I said this girl going to the Olympics"

From accounting to empowering people with the new age

Katie Gasson at the Psychic Channeling and Healing Festival at the South Grafton Ex-Servicemen's Club.

Katie Gasson talks about how she found the new age.

Latest deals and offers

WATCH: News reader tries her hand at hardcore shooter, Doom

Veteran journo and noob gamer takes a shot at Doom

What's on the small screen this week

MasterChef Australia's final four contestants, from left, Harry Foster, Elena Duggan, Elise Franciskovic and Matt Sinclair.

MASTERCHEF makes way for The Bachelor on Ten's reality TV slate.

Guy Sebastian a hit at Splendour in the Grass

Guy Sebastian performs at Splendour in the Grass with Paces.

REALITY TV judge a hit with festival crowd.

Superheroes of the big screen enjoy sounds of Splendour

CHRIS Hemsworth and his Avengers mates drop by Byron festival.

Indigenous artist shows tourists secrets of Aboriginal painting

Ever thought "I could do that" about Aboriginal art?

Dynamic pics from Splendour Day 1

The Strokes perform at Splendour in the Grass 2016. Photo Marc Stapelberg / The Northern Star

Check out the latest pictures from Splendour in the Grass.

You can own this Queensland town for just $1

Yelarbon

Unprecedented auction of town's business centre with no reserve

Work starts on $15M Caloundra apartment building

Turning the first sod at the Aqua View Apartments site in Kings Beach are (from left) husband-and-wife developers Alex Yuan and Stella Sun with construction company Tomkins director Mike Tomkins and Councillor Tim Dwyer.

Developers excited about addition to Kings Beach skyline

Plans revealed for 1500-lot 'master-planned community'

Precinct will be bounded by Boundary St and Shoesmith Rd

Ecco Ripley sales run sparks prime release

MOVING IN: Sekisui House has announced the release of more residential blocks at Ecco Ripley.

Sekisui House is preparing to unveil more land at Ecco Ripley

Massive residential 9-storey high-rise hit by delays

An artist’s impression of the eight-storey-high apartment complex that Bernoth Holdings wants to build in South Toowoomba, next to the City Golf Club.

Developer struggles to get approved high-rise development started