Transcript
Hi everyone. Today I wanted to talk to you all about death tax. We’ve actually been 40 years since Australia got rid of our death taxes, but a lot of us think that’s the end of it and unfortunately that’s not the case. We still have death taxes contained within our superannuation system.
When you’ve got mum and dad and they bequeath their superannuation funds to the adult children, there’s a 17% death tax when the money leaves their super funds.
So if you’ve got a hundred grand superannuation fund and you are on death and that’s what they call a concessional component, that money, when it’s paid your adult children attracts a 17 grand tax bill. If you’ve got $1 million super fund balance, that’s a concessional component and that’s paid to your adult children, there’s 170 grand tax bill as a result of that.
There’s a bit of tax planning and tech strategy that you can do to reduce this and in particular if you have taken your money out of your super fund before you die, then there’s no death tax applicable and when you’re over 60 you can withdraw money from your super fund tax free.
One of your strategies can be that as people get older in their life, they tend to not die so suddenly. Death can take a process of two or three days to six weeks where people can get their affairs in order.
One strategy is to have it documented and talk to your kids such that where, if you are in a position where you’re inside palliative care, the kids know to withdraw the money from the superannuation fund before you pass away.
And if you do that, the timing might be only a day or two or a week, you can actually reduce the death tax component significantly when the money’s out of your superannuation fund. There’s also a bit of planning as to how much money you actually need in super to enjoy a tax free status. And it’s a bit of tact strategy around that that you can talk about.
But sadly, death and taxes are still very much prevalent, and it’s important to have a discussion about what to do with your death tax and estate planning because there’s stuff that you can do. And in particular, getting money out of your super fund before you die is one of the strategies you can do to achieve that. Thanks a lot. Bye.
