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<\/p>\nMitigating the impact of death benefit tax can be supported by ensuring the SMSF deed allows for the transfer of assets out of the fund in a timely manner, a legal specialist said.<\/p>\n
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Kieran Hoare, director at Merthyr Law, said while speaking at the Institute of Public Accountants conference last week that a super deed with the option of including people that can instigate the necessary procedures can help lessen the impact of death benefit tax when a member passes.<\/p>\n
\u201cIn the situation, where say Dad has got a week left to live and the family is busy going around talking to accountants and lawyers and signing all this paperwork, dealing with share registries \u2013 it\u2019s not the ideal way to see that off. It\u2019s better if that can all happen without too much attention from the kids,\u201d he said.<\/p>\n
\u201cYou can design a super deed with the option where you can put people in. For example, the attorney, or the kids can notify the recipient such as the accountant or the lawyer, or whoever it is, by phone or email, and the deed is structured that it\u2019s deemed that from the point that notice is given the assets of the super fund are held on bare trust for the member, rather than on the trust of the super fund.\u201d<\/p>\n
Death benefits tax is an issue that is often high on the list of concerns for SMSF members, Hoare said.<\/p>\n
\u201cIf you\u2019ve got a couple who are married and 60, death benefits tax shouldn\u2019t be that high on their agenda, because usually they don\u2019t both die at the same time. Taking property out of super for death benefits tax isn\u2019t as much of a live issue,\u201d he said.<\/p>\n
\u201cBut for someone who\u2019s in their late 80s or 90s, they\u2019re widowed, it looks like it\u2019s a lot more of a good reason to actually be transferring assets out because death benefits tax can be running into the hundreds of thousands of dollars.\u201d<\/p>\n
He continued that the proposed Division 296 tax is also bringing forward the conservations about death benefit tax and clients are realising that assets, like property, have to come out of super at some time \u2013 whether it is before they die or shortly after.<\/p>\n
\u201cIt makes a lot of sense doing that planning and often it doesn\u2019t necessarily come from the member. It might come from the children,\u201d he said.<\/p>\n
Hoare warned that trying to avoid a hefty death benefit tax should not be done by writing undated cheques, which is considered by the ATO as fraud, and does not work for several reasons, especially if there are assets in the fund.<\/p>\n
\u201c[Those assets] are usually not just cash anyway, and cheques are redundant in around 12 months\u2019 time. A resolution by itself does not do a lot either, nor do off-market transfers,\u201d he said.<\/p>\n
\u201cYou may then have issues with the ATO about when the transfer actually happened. Was it at registration, or was it when you signed the transfer? And if you\u2019ve ever dealt trying to get off-market transfers registered, the registries make it difficult. It takes longer than selling it on the open market.\u201d<\/p>\n
He added that the \u201ctrick\u201d to avoiding large death benefit taxes is to get the assets out of super before the member dies.<\/p>\n
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Keeli Cambourne
\nNovember 25, 2025
\nsmsfadviser.com<\/p>\n","protected":false},"excerpt":{"rendered":"
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