Newsletter
April 2013 Newsletter
Tax certainty for beneficiaries of superannuation death benefits
The Government has released draft regulations that propose to give effect to an earlier announcement made in October 2012 that it will provide certainty to the beneficiaries of superannuation death benefits. The changes will allow the tax exemption for earnings on assets supporting superannuation income streams to continue following the death of a fund member who was in the pension phase until the deceased member’s benefits have been paid out of the fund. If implemented, the changes will apply from 1 July 2012.
The proposed changes appear to be a response to industry concern with the Tax Commissioner’s draft ruling on superannuation income streams issued in a 2011. In that draft ruling, the Commissioner took the position that a superannuation income stream ceases as soon as the member in receipt of the income stream dies, unless a dependent beneficiary of the deceased is automatically entitled to receive an income stream.
According to the Commissioner’s preliminary view, tax would generally apply to a fund’s investment earnings, including realised capital gains, following the death of a pension member. However, the proposed new regulations will ensure that this is not the case.