Page 20 - BOL May 21 Edition

THE 15% TAX TRAP ON SUPERANNUATION DISTRIBUTIONS

(Why you might need a “Conflict of Interest” clause in your EPOA)

After death, any money that the deceased was still holding in
their Superannuation Fund must be distributed out. According
to the usual Superannuation rules, the payment of this money is
made in line with written instructions* and is typically directed to
the deceased’s surviving spouse and/or family members. Under
tax laws however, these payments will be taxed at the rate of
15%** if made to anyone other than the member themselves or a
“dependant”. Because dependants are defined as only a surviving
legal spouse or infant children, any distribution made to other
persons such as the deceased’s adult children is susceptible to the
15% tax bill. Considering Superannuation account balances are
typically well over $100,000 this tax bill can be very substantial.
Importantly however, this course of action, is only available if the
If however, the member had an Enduring Power of Attorney in place member had a “Conflict of Interest” clause written into their Power
before they passed away, then usually, the medical issues which of Attorney. In order to work, the “Conflict of Interest” clause does
are expected to take the person’s life, will enable their Attorneys to need special drafting and of course without a Power of Attorney at
withdraw the entirety of the member’s Superannuation account all, the money transfers before death cannot occur at all.
and pull the money down into an account in the member’s
personal name prior to the date of their death. This payment into * commonly called a Binding Death Benefit Nomination.
the member’s own account is tax free and from here, the money
can then be distributed out to the deceased’s family pursuant to ** tax is calculated by a formula which firstly exempts any tax component of the
accumulated member’s account (the tax component can be found in the tax returns)
the terms of their Will again, tax free. and then factors in the period of time between the date of death and the member’s
permissible date of retirement.
Michael Zande is a Queensland Law Society Accredited Family Law Specialist with over 30
years’ experience in the field. He is the principal at Zande Law Solicitors, Suite 7, Norwinn
Centre, 15 Discovery Drive, North Lakes. To contact Michael for advice, phone 3385 0999.
The information in this article is merely a guide and is not a full explanation of the law. This
firm cannot take responsibility for any action readers take based on this information. When
making decisions that could affect your legal rights, please contact us for professional advice.

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