How to pay just $24,000 tax on $1.6m super inheritance
Having a large tax-free component in your retirement savings is good news for adult offspring who are your beneficiaries.
Q: I would like to work out how much tax would be paid on my super when I die. My super will be willed to my two sons who are not dependent on me. I contributed $1.6 million to my SMSF about 10 years ago – 90 per cent of which came from the sale of a business I operated for over 15 years plus concessional amounts contributed over the years, so only 10 per cent was concessional. I have been receiving a pension from my SMSF for 10 years. The fund has earned about $2 million over the years, but I have also withdrawn about the same amount, so my balance is about $1.6 million. I am struggling to get a concrete answer about how the tax would be calculated. Could you explain if only 10 per cent of my SMSF would be taxable on my death or are the earnings/capital gains of the fund considered as well? Mary
A: There are two taxes in play. Tax is applied firstly to the SMSF on its assessable investment income, and secondly to the death benefits paid, says Leigh Mansell, director of SMSF technical and education service at self-managed super specialist Heffron.
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