The rules governing the taxation of superannuation entitlements following a pensioner’s death are to be changed.
Minister for Financial Services and Superannuation, Bill Shorten released a draft regulation to give effect to the 2012-13 Mid-year Economic and Fiscal Outlook (MYEFO) measure to provide tax certainty to the beneficiaries of deceased estates.
Mr Shorten said investment earnings derived by superannuation funds from assets supporting pensions were exempt from tax.
He said however there had been some concerns for family members about the taxation of a deceased relative’s super.
Fund interest to be exempt
“A draft ruling issued by the Australian Taxation Office (ATO) in 2011 led to some uncertainty over eligibility for this tax exemption following the death of a member to whom a pension was being paid,” Mr Shorten said.
“To address these concerns, the Government announced on 22 October 2012 that it will amend the law to allow the pension earnings tax exemption to continue following the death of a pension recipient until the deceased member’s benefits have been paid out of the fund (subject to the benefits being paid as soon as practicable).
“The measure applies to the 2012 13 and later income years.”
“These regulations will ensure that investment earnings on superannuation benefits that were supporting a pension will continue to be tax exempt following the death of the pension recipient until the benefits are paid out of the fund,” Mr Shorten said.
The draft regulation can be accessed at this PS News link and submissions close 14 February.