Super changes: $1.6 million transfer balance cap and death benefit pensions

Where a taxpayer has amounts remaining in superannuation when they die, their death creates a compulsory cashing requirement for the superannuation provider.

 

 

This means the superannuation provider must cash the superannuation interests to the deceased person’s beneficiaries as soon as practicable. 

It is expected that the new rules provide that where a deceased member’s superannuation interest is paid to a dependent beneficiary in the form of a death benefit income stream, a credit will arise in the dependant beneficiary’s transfer balance account (the superannuation pension ceiling after 1st July 2017).  The amount and timing of the transfer balance credit will depend on whether the recipient is a reversionary or non-reversionary beneficiary.

To reduce an excess transfer balance, you may be able to fully or partially convert a death benefit or super income stream into a super lump sum.  Or the dependent (assuming already in the SMSF) may be able to convert their own existing entitlements.  

Guidance is going to be important, as these issues become increasingly complicated, and advisers become more familiar with the problems and the solutions.

 

AcctWeb

Free Ebook

22 Key Strategies to Dramatically Improve Cashflow in Your Business

What our clients say

"The team at CP Partners Accounting & CP Financial Planners have provided our clients with expert advice in the areas of taxation, property structures, wealth creation, retirement planning, superannuation, insurance and general investment advice.

"We have undoubtedly found that the team at CP are experts in their fields and our clients have been extremely pleased with the results they have achieved....

Read more