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



Visitors advised not to enter state forest

Fires Near Me show fire in Barcoongere State Forrest.

Local RFS has been battling a fire since 10am

Maree forced to calls it quits after 34 years

TIME CALLED: A diagnosis of multiple sclerosis has finally caught up with Maree McKenna who has worked at the South Grafton Ex-Servicemen's Club for 34 years. Her last day on the job is Friday.

A career through fire, flood and a 20-year battle with MS

Memorial board race not held for first time since 2009 tragedy

ON HIATUS: Competitors in last year's Jacob Lollback Memorial Board Race stand for a minute's silence before they hit the surf.

"It was a good time to call time and go out on a good note"

Local Partners

Kim Kardashian West 'sick of talking about Taylor Swift'

Kim Kardashian West is sick of talking about Taylor Swift.

Justin Bieber ordered to attend Miami deposition

Justin Bieber has been ordered to travel to Miami for a deposition

Sludge metal heaven served up across Australia

Black Rheno bring their stripped back sludge metal through regional Australia.

Black Rheno to hit a town near you

Prog metal upstarts to tour Australia

Caligula’s Horse, one of the country’s most exciting and innovative progressive bands, will hit the road for a national tour in November.

Australian prog masters announce national tour

Debra Messing wants to do a 'naughty' Will and Grace reunion

'Will & Grace' star Debra Messing wants a "naughty" reunion

Brad Pitt and Angelina Jolie 'working on custody agreement'

Brad Pitt and Angelina Jolie are thrashing out a custody agreement

Beach-side real estate starts at $85k on Fraser Coast

HERVEY BAY REAL ESTATE: You can buy this townhouse in Scarness for under $300k.

Live your beach-living dream locally.

Clarence Valley property prices go through the roof

Buyers are hungry to sink their teeth into the Clarence Valley

UPDATE: Former rodeo champ's sale rained out, now back on

Larkhill local Ken Consiglio is having an auction of most of the things on his property.

'People kept showing up and we had to turn them away'

Couple build their own 'tiny house' for $45k

Holly Bowen and Oli Bucher built their "tiny house" themselves, only hiring a plumber and an electrician. Photo/supplied

The house, which is built on a trailer and can be towed.

Sunshine Beach property breaks real estate record

The property overlooks Sunshine Beach, as the backyard lawn meets the sand.

Sunshine Beach mansion sale smashes real estate record

NEW HOME: Agents to the rescue for family of nine

RELIEF: Tanya Cone (middle) with her kids and McKimm's Real Estate property managers Regan Firth and Nadine Greenhalgh who helped find her family a home.

DEX article prompts property managers to help family find new home