Private ruling: Superannuation member benefits or death benefits
Date of advice: 11 November 2025
Published: 5 January 2026
Ruling period: Income year ended 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Was the payment made from a member's pension account to the member's personal account (the Payment), shortly after the date of death, a superannuation member benefit as described under subsection 307-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes.

Relevant facts and circumstances: The Member was aged over 65 years at the date of their death. The Member completed a superannuation withdrawal form several days before the date of death to request a full withdrawal and pay the benefit to a nominated personal bank account. The Member died on X date (the date of death). The Deceased's death was then registered. X Superannuation advised, (with evidence provided) that they were not aware of the deceased's death prior to the payment being made. They received the withdraw request form (before the date that the deceased's death was registered). The request form was then processed shortly. X Superannuation was notified of the deceased's death a few months after the date of death. A copy of deceased's Death Certificate has been provided. The Member's personal bank account statement shows the payment from X superannuation was received shortly after the date of death. A X superannuation confirmation letter confirms that the Member's Pension account has been closed and the balance paid in accordance with the Member's instructions.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 301 | Income Tax Assessment Act 1997 section 307-5 | Income Tax Assessment Act 1997 section 307-65 | Income Tax Assessment Act 1997 section 307-70 | Income Tax Assessment Act 1997 subsection 995-1(1) | Income Tax Assessment Act 1997 Regulations 2021 - Regulation 307-70.01 | Income Tax Assessment Act 1997 Regulations 2021 - Regulation 307-70.02 | The Superannuation Industry (Supervision) Regulations 1994 Schedule 1 to the Table in Part 1

Reasons for decision: Detailed Reasoning - Legislative framework - Conditions of release: The Member was 65 years at the date of their death. This meant the member had already satisfied the condition of release in Schedule 1, item 106 of the table in Part 1 of the Superannuation Industry (Supervision) Regulations 1994 (SISR) by reaching the age of 65 years. This condition of release has 'nil' cashing restrictions. Under regulation 6.12 of the SISR, the member's benefits were all converted to unrestricted non-preserved benefits upon meeting a condition of release with 'nil' cashing restrictions. Under subregulation 6.20(1) of the SISR, a member's unrestricted non-preserved benefits in a regulated superannuation fund may be voluntarily cashed at any time. As per subregulations 6.20(2) and (3) of the SISR the whole or a part of the member's unrestricted non-preserved benefits may be cashed as one or more lump sums or one or more pensions. The Member's death then resulted in them meeting the condition of release in Schedule 1, item 102 of the table in Part 1 of the SISR. This condition of release also has 'nil' cashing restrictions. Under subregulation 6.21(1) of the SISR, a member's benefits in a regulated superannuation fund must be cashed as soon as practicable after the member dies. Paragraph 6.21(2)(a) dictates that benefits must be cashed as single lump sums or as an interim and final lump sum for non-dependants; only dependants (for SISR purposes) may cash benefits in the form of a superannuation income stream in the retirement phase, as per paragraph 6.21(2)(b) and subregulations 6.21(2A) and (2B) of the SISR. | Detailed Reasoning - Legislative framework - superannuation lump sums and superannuation income streams: Subsection 995 -1(1) of the ITAA 1997 defines 'superannuation benefit' as having the meaning given by section 307-5. Section 307-5 of the ITAA 1997 states: 307-5(1) A superannuation benefit is a payment described in the table. Table 1: Types of superannuation benefits | Detailed Reasoning - Column 3: - Superannuation benefit type Superannuation member benefit Superannuation death benefit 1 Superannuation fund payment A payment to you from a superannuation fund because you are a fund member. A payment to you from a superannuation fund, after another person's death, because the other person was a fund member. (Table truncated) 307-5(2) A superannuation member benefit is a payment described in column 2 of the table. 307-5(4) A superannuation death benefit is a payment described in column 3 of the table. Section 307-70 of the ITAA 1997 defines 'superannuation income stream benefit' and 'superannuation income stream': 307-70(1) A superannuation income stream benefit is a superannuation benefit specified in the regulations that is paid from a superannuation income stream. 307-70(2) A superannuation income stream has the meaning given by the regulations. The Income Tax Assessment (1997 Act) Regulations 2021 (ITAR 2021) provides that all superannuation benefits are specified for the purposes of subsection 307-70(1) and also provides the definition of 'superannuation income stream' for the purposes of subsection 307-70(2), neither of which are discussed further in these reasons for decision. If a superannuation benefit does not satisfy the ITAR 2021's definitions of a superannuation income stream benefit, subsection 307-65(1) of the ITAA 1997 states: A superannuation lump sum is a superannuation benefit that is not a superannuation income stream benefit (see section 307-70). | Detailed Reasoning - Application - taxation of benefits: The benefit of $x paid from the Member's Pension account as requested shortly before their death but received in their bank account after their death is a superannuation lump sum. This is a straightforward application of subsection 307-65(2) ITAA 1997. | Detailed Reasoning - Legislative framework: The distinction between a superannuation member benefit and a superannuation death benefit is important because the tax treatment of the superannuation benefit varies according to its classification (as well as the age of the recipient and the components of the benefit). The tax treatment of superannuation member benefits is set out in Division 301 of the ITAA 1997. Broadly, section 301-10 states that if a member is 60 years or over when they receive a superannuation benefit, the benefit is non-assessable and non-exempt income. This applies whether the benefit is a superannuation lump sum or a superannuation income stream benefit. (The exception is if the taxable component of the benefit has an element untaxed in the fund: the untaxed element is assessable income and either section 301-95 or 301-100 will apply depending on whether the benefit is a lump sum or an income stream benefit.) The tax treatment of superannuation death benefits is set out in Division 302 of the ITAA 1997. Subdivision 302-B applies where the recipient is a death benefits dependant of the deceased, and Subdivision 302-C applies where the recipient is not a death benefits dependant of the deceased. | Detailed Reasoning - Death benefit or member benefit: An amount that a member requested to be paid from their superannuation fund before their death, but was paid after their death, may be classified as a member benefit instead of a death benefit depending on the facts and circumstances of the payment. A trustee of a regulated superannuation fund can only pay superannuation benefits according to the fund's governing rules, including the fund's trust deed and relevant legislation. These governing rules set out when benefits can be paid and who they can be paid to, including after a member's death. A superannuation fund's governing rules must be read carefully to determine a member's benefit entitlements in the event of death. The trustee of the superannuation fund must assess whether the amount that the member requested to be paid is a member benefit or a death benefit based on the facts known at the time of the payment, including: a. the terms of the member's request. b. the terms of the trust deed and any other governing rules. c. the fund trustee's knowledge at the time that the payment is made (including whether they are aware that the member has died); d. the entity that the payment is being paid to. e. whether the payment is made because of and consistent with the member's request. | Detailed Reasoning - Lump sum benefit: At the time the Member submitted the payment request, the Member had already satisfied a 'nil' condition of release (attaining the age of 65 years) and their superannuation benefits had been converted to unrestricted non-preserved benefits. They were thus entitled to: g. voluntarily cash their benefits at any time (consistent with subregulation 6.20(1) of the SISR); h. cash the whole or a part of their benefits (consistent with subregulation 6.20(2) of the SISR); and i. cash the benefits as one or more lump sums (paragraph 6.20(3)(a) of the SISR) or one or more pensions (paragraph 6.20(3)(b) of the SISR). The SISR also permitted the release of superannuation benefits when the Member met the 'nil' condition of release of death. Subregulation 6.21(1) of the SISR states that a member's benefits in a regulated superannuation fund must be cashed as soon as practicable after the member dies. | Detailed Reasoning - Considering the facts, at the time of the payment of the lump sum benefit:: j. The Member's benefit withdrawal request was made before the date of death, and it appeared to be in line with the terms of a member benefit withdrawal request. k. The X Superannuation's governing rules would require the trustee to act in accordance with the member's valid withdrawal requests. The withdrawal request was considered valid and complete at the time of submission. The Member satisfied the conditions of release and was entitled to voluntarily cash their benefits at the time of making the withdrawal request. l. X Superannuation confirmed that they were not aware of the Member's death at the time that the payment was processed. The payment was processed and arrived in the Member's bank account before X superannuation was notified of the Member's death. m. The payment was made to the Member's personal bank account , in accordance with the Member's instructions as in the withdrawal request. n. It is considered that the withdrawal request was processed in the normal course of business, within a reasonable timeframe. o. The payment was made because of and consistent with the Member's withdrawal request. Accordingly, it is reasonable to treat the superannuation lump sum benefit of $x as a superannuation member benefit. The tax treatment in Division 301 of the ITAA 1997 should apply to the benefit.