Clarity surrounding death benefit pensions above transfer balance cap

Clarity surrounding death benefit pensions above transfer balance cap

Information released in the ATO’s Practical Compliance Guideline 2017/6 has clarified much confusion surrounding superannuation reforms and the commutation of a death benefit income stream before 1 July 2017.

When an individual dies, their superannuation and remaining superannuation interests are to be cashed to their beneficiaries or legal representative by their superannuation provider. This payment is called a superannuation death benefit and can be cashed as:
– A lump sum paid by the superannuation system
– A death benefit income stream retained in the superannuation system
– A combination of both

With the introduction of the transfer balance cap, much confusion has arisen over the correct course of action.

The ATO has stated that the Commissioner will not apply compliance resources to review whether an SMSF has complied with compulsory cashing requirements relating to a death benefit provided that:
– the SMSF member was the spouse of the deceased on the date they deceased,
– the commutation and roll-over of the death benefit income stream is made prior to 1 July 2017, and
– the superannuation lump sum paid from the commutation is a member benefit for income tax purposes because it meets the appropriate requirements (as defined in subsection 307-5(3)).


If you believe the matters discussed above are relevant to your business, please contact Darren Smith of our office to discuss further.

Darren is a Chartered Accountant with extensive experience, including working in the big 4 and medium sized firms before becoming a partner of a city based firm in 2000.

He has gained much experience and has extensive knowledge in providing business and taxation advice, superannuation planning, negotiation of sales and acquisitions of businesses and property development. His client base covers a wide range of industry groups.

Darren works with business owners to grow their businesses and create personal wealth within and outside of their business.

+ There are no comments

Add yours