• Super death benefits

    In most cases, when a person dies their super fund pays their remaining super to their nominated beneficiary. Super paid after a person's death is called a 'super death benefit'.

    If the rules of your fund allow it, you can nominate the beneficiary for your super with your super fund. This nomination may be non-binding or binding.

    If a binding death benefit nomination is allowed, you can nominate one or more dependants and/or your legal personal representative to receive your super.

    If a deceased person did not make a nomination, the trustee of the fund may:

    • use their discretion to decide which dependants the death benefit is paid to
    • make a payment to the deceased's legal personal representative (executor of the deceased estate) for distribution according to the instructions in the deceased's will.

    Contact your fund to find out more on death benefit nominations.

    If you're a dependant of the deceased, the death benefit can be paid as either a lump sum or income stream. If you're not a dependant of the deceased, the death benefit must be paid as a lump sum.

    Dependants of the deceased

    Different rules exist for who is a dependant when making a super death benefit payment (superannuation law) and the resulting tax treatment (taxation law).

    Superannuation law sets out who a death benefit is payable to and taxation law sets out how the benefits will be taxed.

    Who is a dependant under superannuation law

    For the purposes of who can receive a death benefit payment, you are a dependant of the deceased if at the time of their death you were:

    • their spouse or de facto spouse, including different or same sex
    • a child of the deceased (any age)
    • a person in an interdependency relationship with the deceased.

    An 'interdependency relationship' exists if two people:

    • have a close personal relationship
    • live together
    • provide each other with financial support or domestic support and personal care.

    If you would like to leave your super to someone who is not a dependant under the super laws, contact your fund about making a binding death benefit nomination to have the payment made to your legal personal representative. This will ensure your super is distributed according to your will.

    Who is a dependant under taxation law

    For tax purposes, you are a dependant of the deceased if at the time of their death you were:

    • their spouse or de facto spouse, including different or same sex
    • a former spouse or de facto spouse, including different or same sex
    • a child of the deceased under 18 years old
    • in an interdependency relationship with the deceased
    • any other person dependant on the deceased.

    An 'interdependency relationship' exists if two people:

    • have a close personal relationship
    • live together
    • provide each other with financial support or domestic support and personal care.

    Financially dependent on the deceased means you relied on them for necessary financial support. Children over 18 years old must be financially dependent on the deceased to be considered a dependant.

    There are limitations on who can receive a death benefit income stream. Adult children can only receive an income stream if they are under 25 years old and financially dependent on the deceased or have a permanent disability.

    Adult children with a permanent disability can continue to receive an income stream after they turn 25 years old, in all other situations the income stream must change to a lump sum before they turn 25 years old.

    How to apply

    If you believe you're the beneficiary of a deceased person's super or are the trustee of a person's estate, contact their super fund to let them know the person has died and ask them to release the person's super.

    How tax applies

    The tax on a death benefit depends on:

    • whether you were a dependant of the deceased under taxation law
    • whether it is paid as a lump sum or income stream
    • whether the super is tax-free or taxable and whether the super fund already paid tax on the taxable component
    • your age and the age of the deceased person when they died (for income streams).

    To find the tax rates that apply to the death benefit you will get, see:

    If you're a non-dependant of Australian Defence Force and police personnel who died in the line of duty, the lump sum super death benefits you receive have the same tax treatment as a benefit paid to a dependant.

    If you're the trustee of a deceased estate, the estate pays tax on behalf of the beneficiaries of the super. The amount of tax the estate must pay is the same as if the payment was paid directly to the beneficiary.

    If you are a dependant of the deceased

    To work out how your super payout will be taxed, you need to know how much of the money in your super account is a:

    • tax-free component
    • taxable component the fund has paid tax on (the 'taxed element')
    • taxable component the fund has not paid tax on (the 'untaxed element').

    See also:

    Tax-free super

    You don't pay tax on the tax-free component of the death benefit, regardless of how you receive it, your age and the age of the deceased when they died.

    Taxable super received as a lump sum

    If you're a dependant of the deceased, you don't need to pay tax on the taxable component of a death benefit if you receive it as a lump sum. Don't include it on your tax return as income.

    Taxable super received as an income stream

    You pay tax on the taxable component of a death benefit you receive as an income stream at the rates shown in this table:

    Age of beneficiary and deceased (at the time of death)

    Type of super

    Effective tax rate (including Medicare levy)

    Beneficiary is more than 60 years old or the deceased was more than 60 years old

    Taxable component – taxed element

    Tax-free (not assessable, not exempt income)

    Taxable component – untaxed element

    Your marginal tax rate less 10% tax offset

    Both the beneficiary and the deceased are under 60 years old

    Taxable component – taxed element

    Your marginal tax rate less 15% tax offset

    Taxable component – untaxed element

    Your marginal tax rate

    If you're under 25 years old and started receiving a death benefit as an income stream after 1 July 2007, you must stop the income stream and take the remaining benefit as a lump sum on or before the date you turn 25 years old. The lump sum is tax-free.

    Filling out your tax return

    If you got the death benefit through a deceased estate

    If you receive a death benefit through a person's estate, you don't need to include the death benefit in your assessable income. The estate will have paid tax on your behalf.

    If you got the death benefit directly from a super fund

    The super fund will send you a payment summary which shows:

    • how much of the death benefit is taxable and how much is tax-free
    • how much tax they withheld on your behalf
    • any Australian superannuation income stream tax offsets you're able to claim.

    When you fill out your tax return you don't need to include as income:

    • the tax-free component of your super payment
    • any taxable component you get in a lump sum.

    You need to include the taxable component you get through an income stream as assessable income on your tax return, if both you and the deceased were under 60 years old or the taxable component contains an untaxed element. Claim tax offsets in the offset section of your tax return

    If you are not a dependant of the deceased

    To work out how your super payment will be taxed, you need to know how much of the money in your super account is a:

    • tax-free component
    • taxable component the fund has paid tax on (the 'taxed element')
    • taxable component the fund has not paid tax on (the 'untaxed element').

    See also:

    Tax-free super

    You don't need to pay tax on the tax-free component of the death benefit, regardless of how you receive it, your age and the age of the deceased when they died.

    Taxable component received as a lump sum

    If you're not a dependant of the deceased and you receive a death benefit as a lump sum, the taxable component of the payment will be taxed at your marginal tax rate.

    The amount of tax you must pay may be reduced by tax offsets. The effective tax rate you will pay is described in this table.

    Type of super

    Effective tax rate (including Medicare levy)

    Taxable component – taxed element

    Your marginal tax rate or 17%, whichever is lower

    Taxable component – untaxed element

    Your marginal tax rate or 32%, whichever is lower

    Taxable super received as an income stream

    From 1 July 2007, a non-dependant can't take the death benefit as an income stream under superannuation law. For non-dependants who had an income stream first paid to them before 1 July 2007, your payment will be treated in the same way as a payment to a dependant.

    Super death benefits paid to a foreign resident (not including former temporary residents) are subject to the same withholding rates as payments made to a resident.

    The payment is deemed to be Australian sourced income, however, if you live in, or you are a tax resident of, a country with a double tax agreement with Australia, there may be no Australian tax imposed.

    Check the taxation laws of the country where you are a tax resident and whether a double tax agreement exists between Australia and that country.

    Tax saving amount

    A tax saving amount, previously known as anti-detriment payment, is an additional lump sum payment that may be made from a complying super fund on the death of a member to a:

    • spouse or former spouse of the deceased
    • trustee of the deceased estate
    • child (including an adult child) of the deceased.

    A tax saving amount is not available where the death benefit is paid as an income stream.

    The tax saving amount increases the deceased member’s lump sum death benefit to negate the effect of tax while the member’s benefit was accumulating in the fund.

    Your super fund can advise whether you are entitled to a tax saving amount.

      Last modified: 01 Sep 2016QC 37785