Super and estate planning
Rollovers of super death benefits
From 1 July 2017, the taxation definition of a 'roll over superannuation benefit' has been amended to allow a superannuation lump sum death benefit to be rolled over where the beneficiary of a deceased member's superannuation interest is a dependant eligible to receive a death benefit income stream.
This change allows an eligible beneficiary to:
- Rollover a death benefit entitlement to another superannuation fund for the commencement of a death benefit income stream
- Commute and rollover an existing death benefit income stream to commence a new death benefit income stream.
Where a beneficiary is not eligible to receive a death benefit income stream, the death benefit is excluded from being a roll over superannuation benefit. Death benefits paid to beneficiaries not eligible to receive a death benefit income stream are not included within the meaning of roll over superannuation benefit. These beneficiaries can only receive a death benefit lump sum cashed out of the superannuation system.
Where an individual's superannuation interest is rolled over, the superannuation provider that originally held the superannuation interest is required to provide the receiving superannuation provider with a roll over superannuation benefit statement containing particulars as to the superannuation interest and the individual. The roll over superannuation benefit statement is an approved form.
The approved form requirements for roll over superannuation benefit statements will be updated, to ensure that death benefits that are rolled over are notified to the receiving fund and continue to receive death benefit treatment under both the regulatory and income tax provisions.
Rollover of death benefit income streams prior to 1 July 2017
Where a death benefit income stream was paid to a spouse, the spouse was able to commute and rollover their income stream provided the commutation occurred outside
the prescribed period, which is the later of:
- six months after the death of the deceased person, or
- three months after the grant of probate of that deceased person's will or letters of administration of that deceased person's estate, or
- if the payment of the benefit is delayed because of legal action about entitlement to the benefit - six months after the legal action ceases, or
- if the payment of the benefit is delayed because of reasonable delays in the process of identifying and making initial contact with potential recipients - six months after that process is completed.
In all other situations, death benefits and death benefit income streams were not eligible to be considered a rollover superannuation benefit for tax purposes.
Last modified: Thursday, January 11, 2018