Super and estate planning
Prior to 1 July 2017, trustees of a complying superannuation fund were able to increase a lump sum death benefit by an additional amount (commonly known as an 'anti-detriment payment') when the death benefit is paid directly, or indirectly via the estate, to the spouse, former spouse or child of the deceased. Trustees making an anti-detriment payment were entitled to a corresponding tax deduction.
From 1 July 2017, this tax deduction is no longer available where the member dies on or after 1 July 2017. Without the tax deduction, it is not feasible for trustees to make anti-detriment payments where the member dies on or after 1 July 2017.
The removal of the anti-detriment payment significantly reduces the amount of lump sum death benefits payable to eligible beneficiaries. While there are different ways to calculate the anti-detriment amount, it is often equal to 17.65% of the deceased member's taxable component.
A two year transition period will apply from 1 July 2017 to 30 June 2019. During this period, trustees are able to claim a tax deduction where they pay lump sum superannuation death benefits for members who died prior to 1 July 2017. However, from 1 July 2019, no tax deductions can be claimed for anti-detriment payments, irrespective of whether the member died before 1 July 2017.
Last modified: Wednesday, July 24, 2019