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.

TV show features Mandalay home

The pool at Mandalay House. Contributed

The Mandalay home is currently on the market for $19 million

Something for the kids

Amelia McKay, 8, trying out trapeze .

Sensory Circus kicks off again next week

Storks delivers more than bouncing babies

TOO CUTE: A scene from the movie Storks, which is showing at Bowen Summergarden Cinema this week.

Storks hits cinemas this week

Local Partners

Two car collision closes Bruce Hwy for almost two hours

Senior Constable Tim Farran of the Whitsunday Police said a car turning right onto the Bruce Hwy failed to give way at the intersection.

Mackay AFL player celebrates premiership he can't remember

Mackay City Hawks' Nick Morton with his wife Victoria and their daughter Isabelle after this year's grand final.

Mackay City Hawks player can't remember his premiership win

What caused earthquake off Airlie Beach: expert

Map of earthquakes across australia including the one off BowenPhoto: Contributed

A 3.8 quake off Airlie is just a taste of what's to come

Resident thought earthquake was a "big truck” passing by

Residents said they felt the earthquake overnight

Earthquake strikes off the coast of Airlie Beach

Geoscience Australia has recorded a 3.8 magnitude earthquake off Airlie Beach.

An earthquake has hit off the coast of Airlie Beach.

Postie riders deliver mental health funds

FOR A CAUSE: The Postie Bike Safari Gold Rush 2016 crew touch down in Airlie Beach.

A special have gotten together to raise funds for Black Dog.

TV show features Mandalay home

The pool at Mandalay House. Contributed

The Mandalay home is currently on the market for $19 million

Something for the kids

Amelia McKay, 8, trying out trapeze .

Sensory Circus kicks off again next week

Classic car auction draws buyers from US, Dubai

"He wants everyone to enjoy the cars, the collection got too big'

Naomi Watts and Liev Schreiber split

Naomi Watts and Liev Schreiber

Naomi Watts and Liev Schreiber have split after 11 years together.

Why Chris Hemsworth was spotted wearing nail polish

RED CARPET: Do you think Chris Hemsworth is the typical unpolished but well-natured Aussie bloke?

He's now officially the best bloke in Australia

Testament's new album is a concept album

ROME, ITALY- JULY 27, 2016: Testament photographed at The Roman Collisseium in Rome, Italy on July 27,2016. Gene Ambo

Testament to release new album

'Baby' recreates famous Nirvana cover shot 25 years later

The baby from Nevermind album has recreated the iconic cover shot.

PREVIEW: Luke Cage origin story is a strong addition to MCU

Mike Colter in a scene from the TV series Marvel's Luke Cage.

MIKE Colter stars as latest Marvel superhero to get his own series.

Kate goes down fighting in heated Survivor elimination

Australian Survivor contestant Kate Campbell.

YOGA teacher's 'good guys' alliance fails to get off the ground.

$40million hotel, shops development project for Mackay

Mt Pleasant hotel and retirement accommodation, proposed at 194-202 Malcomson St.

$40m development to take Mackay to 'the next level'

TV show features Mandalay home

The pool at Mandalay House. Contributed

The Mandalay home is currently on the market for $19 million

Property 200m from ocean selling for just over $100K

BEACHCOMBER PARK: Work has started on a new $19.2 million development at Toogoom.

The estate's developer is offering huge discounts for early buyers.

UPDATE: Former rodeo champ's sale rained out, now back on

Larkhill local Ken Consiglio is having an auction of most of the things on his property.

'People kept showing up and we had to turn them away'

First stages of $25 million housing development underway

New development on Madsen Rd - The Springs.

The blocks of land are much bigger than usual

Couple build their own 'tiny house' for $45k

Holly Bowen and Oli Bucher built their "tiny house" themselves, only hiring a plumber and an electrician. Photo/supplied

The house, which is built on a trailer and can be towed.