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


Stay Connected

Update your news preferences and get the latest news delivered to your inbox.

Queensland has one of hottest August nights on record

You probably didn't need any blankets last night.

Minimum temperatures across the state in double digits

Bunnings seeks support for third try at Coolum store

THIRD GO: Bunnings is proceeding with a third application for a complex at Coolum. The proposed 5650sq m warehouse would be about 70% of the size of the store which opened at Maroochydore late last year.

Bunnings hopes it will be 'third time lucky'

East coast low set to smash the Sunshine Coast

More wild weather is on the way after an east coast low smashed the Sunshine Coast in June.

Why the Sunshine Coast is in for wild weather

Latest deals and offers

The perils of play: How kids are most likely to be hurt

THE thought of your child suffering a life-threatening accident is the stuff of parents’ nightmares.

Queensland has one of hottest August nights on record

You probably didn't need any blankets last night.

Minimum temperatures across the state in double digits

Bunnings seeks support for third try at Coolum store

THIRD GO: Bunnings is proceeding with a third application for a complex at Coolum. The proposed 5650sq m warehouse would be about 70% of the size of the store which opened at Maroochydore late last year.

Bunnings hopes it will be 'third time lucky'

East coast low set to smash the Sunshine Coast

More wild weather is on the way after an east coast low smashed the Sunshine Coast in June.

Why the Sunshine Coast is in for wild weather

Is it you, Migaloo?

Migaloo is predicted to cruise into Sunshine Coast waters tomorrow.

Confusion and debate erupts as to whether white whale is Migaloo

Spot Migaloo the white whale on the Sunshine Coast soon

Get the binoculars at the ready.

Thursday is the day Migaloo is expected to pass by

Die-hard fan's 34 magic Gympie Muster years

STICK AROUND FOR A BEER: Mal Williams has been at every Gympie Muster for 34 years.

Mal Williams has only missed one Muster in 35 years - the first one

Maryborough couple's wedding turned in a viral nasty joke

UNHAPPY: Maryborough couple Emma and Steven Dilliway who star on Australia's Cheapest Wedding and are not happy with the outcome.

Reality television helped turn this wedding into an internet joke

John Krasinski has better sex now he's in good shape

John Krasinski says there's at least one good reason to get jacked

Kanye West gets 'free reign' at VMAs

Kanye West has been let off the leash for the VMAs

Robbie Williams sings at manager's funeral

Robbie Williams and Lamar sang at the funeral of their manager

Twice as much Troy will please country music lovers

CATCH HIM WHILE YOU CAN: Singer Troy Cassar-Daley plans to take some time off to spend with family next year.

TROY Cassar-Daley is releasing a new album and book.

Courtney Stodden gets Reborn Doll

Courtney Stodden is trying to get over her recent miscarriage

REVEALED: Pat Rafter's $18m Coast house on the market

Check out the photos of the Coast's most expensive property for sale

The "correction we had to have" in Gladstone's rentals

UPWARD MARCH: The rental vacancy rate in Gladstone has improved for the first time in more than a year, providing a confidence boost in the market.

Vacancy rates improve with signs that things are getting betterF

ISLAND FOR SALE: Cheap Fraser Coast island drops price again

Suna Island in the Great Sandy Strait will be auctioned by Ray White Hervey Bay on Saturday morning.

This is the cheapest island you will find for sale in Australia

How a family home can fit on a 250sq m block

This is what you can build on 250m2.

Here's the floor plan of a home built on 250sq m

$100m plan for Curtis Island 'world class' luxury resort

$100 million resort: Top views at Turtle Street at Curtis Island.

"At the moment we think it meets all the town planning approvals.”

Noosa mayor on "red alert" over planning court decision

Mayor Tony Wellington hands down his first budget.

Mayor upset at lack of say about look and feel of Noosa