G1 Death benefit increase

Is the SMSF entitled to a deduction because the SMSF increased the amount paid as a super lump sum death benefit (a death benefit increase)?

No	Leave G1 blank. Go to H1 and H2.
Yes	Read on.

Write at G1 the deductible amount for death benefit increases.

The SMSF is entitled to a 'death benefit increase' deduction if it:

• has been complying since 1 July 1988 or since its establishment (if later), and
• paid a super lump sum death benefit in 2014–15 to the trustee of a deceased member’s estate or to a deceased member’s dependants, and
• increased (or did not reduce) a super lump sum death benefit by an amount (the 'tax saving amount') so that the super lump sum death benefit amount is the amount the SMSF could have paid if no tax were payable on contributions.

A 'death benefit increase' is also known as an 'anti detriment payment'.

If the SMSF is entitled to a 'death benefit increase' deduction, work out the amount of the deduction by dividing the tax saving amount by the low tax component tax rate (15% for a complying SMSF).

If the payment is made to the trustee of the deceased’s estate, 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.

ATO ID 2010/05 describes a method for working out the amount of the tax saving amount.

See also:

• Death of a member
• ATO Interpretive Decision ATO ID 2010/05 – Complying superannuation fund: deduction for increased amount of superannuation lump sum death benefit
• ATO Interpretative Decision ATO ID 2012/10 – Income Tax: anti detriment payments paid by a complying superannuation fund to a trustee of a deceased estate
• Section 295-485 of the Income Tax Assessment Act 1997

Note:

If the SMSF has exempt current pension income this does not affect the amount the SMSF is entitled to deduct for the death benefit increase. For more information see How are expenses treated when an SMSF has ECPI?