How do I stop my family being taxed on my super when I die?

My will states that my share of my home is left to my husband, and my superannuation is to be divided three ways between my husband and my two children. My children are financially independent. Would they be liable for tax when inheriting their share of my super? Am I correct in understanding that a good strategy would be to instruct my attorney to withdraw my superannuation in full if my death was imminent and deposit that in my bank account? If this was done, I assume the money would form part of my estate distribution to my beneficiaries and there would be no tax on this.

There is a death tax of 15 per cent plus Medicare levy for the taxable component of superannuation that is left to a non-dependent. In this context, a partner is always regarded as a dependent. As you correctly point out, if the attorney for the fund member withdraws the entire superannuation balance tax-free before death, the death tax is not applicable because there are no taxable funds left to be bequeathed to a non-dependent. Keep in mind that the two main reasons to have money in superannuation are asset protection, and to leave assets to grow in a low tax environment.

Once a person becomes quite old, they could well decide they are better off taking their money out of superannuation tax-free while they are still able.Credit:Simon Letch

Once a person becomes quite old, they could well decide they are better off taking their money out of superannuation tax-free while they are still able, and make a gift to their beneficiaries to enjoy the pleasure this may give. Of course, the effect of gifting on the age pension should be considered if this course of action seems appropriate. You can also reduce the taxable component if you are under 75 by using a re-contribution strategy whereby you withdraw a chunk of money from your superannuation tax-free and then re-contribute it as a non-concessional contribution.

Could you advise how the deemed amount for the Commonwealth Seniors Health Card (CSHC) is calculated for an NSW government fortnightly defined benefit pension?

John Perri of AMP Technical tells me that only account-based pensions are deemed for the CSHC, so it does not apply to defined benefit pensions. In your case, the taxable income from the defined benefit pension (if any) will be counted towards the CSHC income thresholds.

My wife and I are with Australian Super. On November 24, I spoke to customer service when my wife was locked out of her account due to the upgrade of the AS portal. They told us the accounts will be consolidated into one login. For the past three months I have tried vainly to try to log into my account, and even in late January I was told to wait for the technical team to resolve the issue. I have seen the complaints on social media, with the company claiming the problems relate to a few customers. I was wondering whether you could shed some light on the matter.

An Australian Super spokesman tells me that they recently implemented a major technology upgrade with the aim of improving the usability and accessibility of the member portal and mobile app. They said the upgrade provides a better and more secure platform to cater for future growth and members’ preference to self-serve. Last financial year, members logged into the portal more than 11 million times.

Since the upgrade, there have been 3.5 million visits to the mobile app and nearly 2 million visits to the member portal. They are aware that some issues have emerged that have affected some members, but they can be assured that Australian Super is well aware of them and is continuing to work to resolve the remaining issues as quickly as possible.

I am applying for the aged pension in 2024 and my husband will reach pensionable age in 2027. Will my husband’s account-based pension count for my eligibility? He is considering rolling it back to an accumulation account. If he does that, will it become exempt?

Money in superannuation in accumulation is not counted by Centrelink until the holder reaches pensionable age. However, if that fund is in pension mode it will be assessed by Centrelink irrespective of the age of the owner. By commuting his account-based pension fund back to accumulation, his fund should become exempt until he reaches pensionable age.

  • Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. Investors should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

Noel Whittaker is the author of Retirement Made Simple and numerous other books on personal finance. Email: [email protected]

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