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G Death benefit increase

Last updated 12 February 2019

Show at G the increased amount of superannuation lump sum death benefits.

This deduction is available to a fund that has been complying since 1 July 1988 or, if established at a later date, since that date. The fund can deduct an amount where it increases (or does not reduce) a superannuation lump sum death benefit so that the death benefit amount is not reduced because of the tax on contributions (the 'tax saving amount'). The lump sum payment must be made to the trustee of the deceased's estate or to the deceased's dependant (an individual who was a spouse, former spouse or child of the deceased) at the time of death or payment, in order to claim the deduction.

The deduction is only available to the extent that the spouse, former spouse or child of the deceased can reasonably be expected to benefit from the estate.

The following definitions of 'spouse' and 'child' apply only for the purpose of determining the deduction for the increased amount of superannuation lump sum death benefits.

Spouse of the deceased is a person (whether of the same sex or opposite sex) who:

  • the deceased was in a relationship with that was registered under a prescribed state or territory law,
  • although not legally married to the deceased, lived with the deceased on a genuine domestic basis in a relationship as a couple.

Child of the deceased includes:

  • an adopted child, a stepchild or an ex-nuptial child of the deceased
  • a child of the deceased's spouse
  • someone who is a child of the deceased within the meaning of the Family Law Act 1975 (for example, a child who is considered to be a child of the person under a state or territory court order giving effect to a surrogacy arrangement).

The deduction is available under section 295-485 of the ITAA 1997. The amount of the deduction is calculated by dividing the tax saving amount by the low tax component rate (which is generally 15%).

The fund can deduct the amount in the income year in which the lump sum is paid.