Private ruling: Superannuation death benefit
Date of advice: 2 May 2023
Published: 19 June 2023
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is the superannuation lump sum payment received by the deceased estate a superannuation death benefit, with regard to any pay as you go withholding obligations in accordance with section 12-85 of Schedule 1 to the Taxation Administration Act 1953 (TAA)? | A1: Yes.

Relevant facts and circumstances: The Deceased died in the 20XX-XX income year. The Deceased was receiving a reversionary pension from the Fund. The Beneficiaries are the adult children of the Deceased. The Fund paid a superannuation death benefit lump sum to the Deceased's estate in the 20XX-XX income year. Summary: The superannuation death benefits paid to the estate of the Deceased are treated as if they were paid to a non-dependant of the Deceased and subject to tax accordingly.

Relevant legislative provisions: Taxation Administration Act 1953 Section 12-85 | Income Tax Assessment Act 1997 Section 302-10 | Income Tax Assessment Act 1997 Section 302-145 | Income Tax Assessment Act 1997 Section 302-195

Reasons for decision: Detailed Reasoning - Superannuation lump sum benefit: A superannuation lump sum death benefit has been paid by the Fund to the Deceased's estate. The beneficiaries of the deceased estate are the adult children of the Deceased and are non-dependant beneficiaries as per section 302-195 of the Income Tax Assessment Act 1997 (ITAA 1997). Under section 302-10 of the ITAA 1997, the taxation arrangements for superannuation death benefits paid to a trustee of a deceased estate are determined in accordance with the taxation arrangements that would otherwise apply to the person or persons otherwise intended to benefit from the estate. Subsequently, it is the responsibility of the legal personal representative to pay any superannuation death benefits tax from the deceased estate before it is distributed. Where death benefits are paid by the estate to a 'death benefits dependant', no tax will be payable. If, however, any part of the superannuation death benefit is payable to a beneficiary who does not fall within that definition, the trustee of the deceased estate will be responsible for declaring and paying tax on the taxable component of the death benefit. Under section 302-145 of the ITAA 1997 a superannuation death benefit paid to a non-dependant is taxed as: • element taxed in fund - 15% • element untaxed in fund - 30% Division 12 of Schedule 1 to the TAA sets out payments from which amounts must be withheld. In particular, section 12-85 of Schedule 1 to the TAA states: An entity must withhold an amount from any of the following payments it makes to an individual: (a) a *superannuation lump sum; (b) a payment that is an *employment termination payment or would be one except that it is received more than 12 months after termination of employment. | Detailed Reasoning - Relevant legislative provisions:: Taxation Administration Act 1953 Section 12-85 Income Tax Assessment Act 1997 Section 302-10 Income Tax Assessment Act 1997 Section 302-145 Income Tax Assessment Act 1997 Section 302-195