The Government has moved to “provide tax certainty for deceased estates in situations where a person has died while in receipt of a superannuation income stream” by issuing recent legislation amendments.
These amendments confirm that when a fund member was receiving a superannuation income steam prior to their death (therefore the earnings on this pension are tax exempt); upon the death of the member the superannuation fund will continue to be entitled to the same earnings tax exemption in the period from the member’s death until their benefits are paid out.These can be paid out as a lump sum or as a new super pension.Even when there is no reversionary pension.
This is subject to the benefits being cashed as soon as practicable and has a few exceptions such as life insurance payouts.The level of the exemption would be no greater than it was before the member’s death (allowing for investment earnings after the member’s death).
These amendments apply from the 1st of July 2012.
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