Death benefits Q&As

Q: How do I ensure that my superannuation goes to the beneficiaries I nominate?

There are several ways to give you certainty that your super benefit will be paid to your nominated beneficiaries and/or your legal personal representative.

If you are a member of an industry or retail super fund, find out if they provide you with a binding death benefit nomination. This directs the trustee of your fund to act as you have instructed to pay your super to your dependants at the time of your death and/or your legal personal representative who is usually the executor of your estate. The trustee is legally bound to pay a proportion of your benefit to whoever you direct in that nomination. If you nominate that your death benefit should be paid to your legal personal representative, usually the executor of your estate, then the benefit must be distributed to your beneficiaries as indicated in your Will.

If you are a member of a self-managed super fund (SMSF) you are also able to make a binding death benefit nomination, which legally binds the trustee to distribute your super as you have directed to your dependants and/or legal personal representative.

In addition, it is possible with an SMSF that the fund’s trust deed appoints someone in your place, such as your legal personal representative, as trustee or director of the corporate trustee to ensure your death benefit is distributed as you have directed.

Q: Is it better to nominate beneficiaries through direct nomination or through (the member’s) estate and their Will?

The answer to your question depends on a number of factors.

Under the superannuation legislation death benefits are required to be paid to either or both your dependants at the time of your death and/or to your legal personal representative who is usually the executor of your estate. Dependants at the time of your death include your spouse and children of any age, someone with whom you are in an interdependency relationship with or a person who is ordinarily dependant on you for support at the time of your death.

As a rule, death benefits paid to dependants are tax free, however, there is one exception – children who are older than 18 who are required to pay tax on the ‘taxable component’ of the death benefit they receive. The tax-free status of your death benefit continues to apply to children over 18 who are disabled or where the child over 18 receives the death benefit because you are a member of the defence force, for example, and have ‘died in the line of duty’. Where the death benefit is paid to your legal personal representative and distributed to your child over 18 via your estate, no Medicare levy is payable on the taxable component of the amount they receive.

Q: What are the advantages and disadvantages of nominating your estate as the nominated beneficiary?

If you nominate your legal personal representative, your death benefit will be paid to your estate and distributed to your beneficiaries according to your Will.

If your super benefit is paid to a dependant for superannuation purposes such as your surviving spouse, child under 18, person with whom you have an interdependency relationship or is dependent on you for support at the time of your death, then no tax is payable.

However, if your death benefit is paid to a child older than 18, with some limited exceptions, the child pays 15% tax plus 2% Medicare on the taxable component of your death benefit which is calculated at the time of payment from the fund. The limited exceptions where no tax is payable on the benefit apply to a disabled child older than 18 or to your children who received the death benefit as a result of you passing in the line of duty such as a member of the armed services or emergency services.

Where the death benefit is paid to a child over 18 via your estate, tax is paid on the taxable component at the rate of 15% as a general rule and is not subject to Medicare. That is, an adult child may pay less tax this way.

The main disadvantage of paying the death benefit to the legal personal representative is that it opens up the distribution of the benefit to the beneficiaries of the member’s estate. The beneficiaries under the estate could include anyone mentioned in the will and may include others who wish to challenge it. By comparison, the distribution of the death benefits via your super fund is limited to dependants of the deceased as defined in the superannuation legislation.

Q: Does a valid death benefit nomination take precedence over the trust deed (should the nomination not be in line with death benefits payments clauses in the deed)?

A member without a reversionary pension has passed away. The surviving member wishes to take over the pension (per the current death benefit nomination). That is, he wants the pension to revert to himself.

The fund’s trust deed sets the boundaries for the terms of the death benefit nomination which is authorised by the deed. To be consistent with the trust deed any binding death benefit nomination must stay within those boundaries otherwise it may be considered invalid.

If a member was in receipt of a non-reversionary pension it comes to an end on the death of the member. If the deceased member has nominated someone else who is a member of the fund to receive their death benefit, they must qualify as a dependant under the superannuation law. If that is the case, and if the trust deed permits, it will be up to the member to request the commencement of a new pension.

Paragraph 29 of Taxation Ruling 2013/5 says that:

Death of a member

29. A superannuation income stream ceases as soon as a member in receipt of the superannuation income stream dies, unless a dependant beneficiary of the deceased member is automatically entitled, under the governing rules of the superannuation fund or the rules of the superannuation income stream, to receive an income stream on the death of the member. If a dependant beneficiary of the deceased member is automatically entitled to receive the income stream upon the member’s death, the superannuation income stream continues.

As it would appear from your question that there is no automatic entitlement to receive the pension on the member’s death as it is non-reversionary, the recipient would need to start a new pension.

Q: Is nominating your legal representative as the defined death benefit recipient the best way to avoid any tax obligations for your adult children?

See the third question on this page.

When a death benefit is paid to a child over 18 the taxable component of the benefit is taxable. The tax rate is 15% plus 2% Medicare if it is paid directly from the fund to the child.

If the death benefit is paid to the legal personal representative of the deceased and distributed to an adult child via the estate of the deceased, then tax of 15% tax is payable on the taxable component. However, no Medicare is payable.

Q: If a member makes a binding death benefit nomination (BDBN) to their two children, say 50% benefit each, and one child dies, does this make the whole BDBN invalid?

Or does the remaining child receive 100% of the benefit on death of the member?

Whether the remaining child receives 100% of the benefit on the death of the member, if one child predeceases the member, will depend on the wording of the binding death benefit nomination (BDBN). If the fund rules permit, the member’s BDBN could direct the trustee to pay the 50% of a predeceased child’s benefit to the surviving child or to another dependant and/or to the legal personal representative of the deceased.

Q: If you want to leave your super to your spouse and keep it within the super system, are you best to make the spouse the beneficiary rather than the legal personal representative?

Can the fund give the choice to pay out in cash or keep in the super fund?

If a death benefit entitlement is made to the surviving spouse, it is possible for the spouse to retain the death benefit in the fund. However, any death benefit retained in the fund must be paid to the surviving spouse as an account-based pension. The capital sum used to commence the pension, including other pensions commenced by the surviving spouse, are required to remain within his or her Transfer Balance Cap.

If the death benefit is paid to the deceased member’s legal personal representative via their estate, it will leave the superannuation system.

Q: Can nominated beneficiaries be a trust e.g. a disability trust?

No. Under superannuation law, death benefits must be distributed to either or both your dependants and/or legal personal representative (usually the executor of your estate) at the time of your death.

Dependants at the time of your death include your spouse and children of any age, someone with whom you have an interdependency relationship or a person who is ordinarily dependant on you for support at the time of your death.

It is not possible to nominate a disability trust as death benefit beneficiary as beneficiaries are limited to individuals such as dependants and/or the member’s legal personal representative.

Q: I live in NSW and our SMSF is registered in NSW. What is the regulation with our binding death benefit nominations as to frequency of updating them if there are no changes to them?

And, a technical matter… is it necessary to do one for each pension account if a member has multiple pension accounts?

A death benefit nomination is a formal nomination by a member to the trustee of a super fund as to who the intended beneficiary of their superannuation benefits will be upon their death. Depending on the terms of the super fund deed, the nomination can be binding or non-binding and lapsing or non-lapsing. If the death benefit nomination is a lapsing nomination, it would require renewal prior to the date on which it lapses. If the death benefit nomination is non-lapsing, there is no requirement to update it unless you wish to change the terms of the death benefit nomination.
 
Before making a death benefit nomination, the trust deed of the fund should be reviewed to check whether nominations are allowed and ensure the proposed form is appropriate and complies with the requirements of the fund. Most retail and industry funds will have a nomination form that must be completed and so it is best to ask for that nomination form rather than prepare something bespoke.

The SIS Act and SIS Regulations permit a trust deed to contain provisions enabling a member to make a binding death benefit nomination. The trust deed of a fund with more than six members may adopt the formal requirements for binding death benefit nominations for a non-self-managed fund which are set out in SIS Regulation 6.17A. Some of the key formal requirements are below:
 
(i) The trustee must provide sufficient information to ensure the member understands their right to make a binding nomination.

(ii) The nominees must be dependants or the legal personal representative (that is, the executor or administrator of the estate).

(iii) The proportion payable to each nominee must be certain.

(iv) The nomination must be in writing, signed by the member in the presence of two witnesses who are over 18 and not mentioned in the nomination.

SIS Regulation 6.17A also states that unless revoked by the member, a binding death benefit nomination will lapse after three years or such shorter period as the fund’s deed may specify (but note this does not apply to self-managed super funds).
 
It is important to be aware that the trust deeds of some retail super funds permit members to make non-lapsing beneficiary nominations which are expressed not to lapse after three years. These nominations may or may not be legally binding on the trustee – it depends on the terms of the applicable trust deed.

Self-managed super funds (SMSFs) may have a nomination form annexed to the trust deed and will almost certainly have the requirements for the nomination set out in the body of the trust deed. It is therefore important to review the trust deed carefully.

In regard to your second question, there is no requirement for a binding death benefit nomination to be made for each pension a person has in place as well as another one for their accumulation phase assets. The wording of the nomination will usually refer to how the superannuation benefit, that is the total benefit in the fund, will be allocated. However, if a member of an SMSF wishes to nominate that a particular beneficiary receives the proceeds of a particular pension or the member’s accumulation phase balance, they can do so by having a bespoke binding death benefit nomination drafted by a specialist lawyer.

Q: What are the differences between a death benefit pension and reversionary pension and is one better than the other from a tax and/or payment perspective?

A death benefit pension, as the name suggests, is a pension payable from a superannuation fund after the death of the fund member.

At the time of the member’s death the beneficiary, who is usually the surviving spouse or a death benefits dependant of the deceased, will decide how they wish to receive the death benefit. They may decide to receive the death benefit as a lump sum or pension or a combination of the two. If they decide to receive a pension it will be referred to (technically) as the death benefit pension because it has arisen after the death of the member.  

In contrast, where a fund member has commenced a pension in the fund it may be a reversionary or non-reversionary pension. If the member has decided to commence a pension that pays a reversionary pension to their surviving spouse on the member’s death, the surviving spouse will become automatically entitled to receive the pension. The amount of the pension received by the surviving spouse will depend on the rules of the fund or the pension agreement. For example, if the pension is 100% reversionary then the surviving spouse will receive a continuing pension equal to the amount being received by the deceased at the time of their death and on the same terms and conditions as set out in the rules of the fund or pension agreement. If the pension is 75% reversionary then the surviving spouse will receive 75% of the amount being received by the deceased at the time of their death and on the same terms and conditions as set out in the rules of the fund or pension agreement. Depending on the rules of the fund or the pension agreement, it is possible to convert the capital that is supporting the pension in whole or partially to a lump sum.

Q: Under a reversionary pension, does the ‘asset’ of superannuation automatically transfer to the beneficiary receiving the pension?

Just to clarify, I assume that you are referring to the remaining balance of the deceased person’s pension as the ‘asset’. If that’s the case then the reversionary pensioner, the person receiving the pension, becomes entitled to a reversionary pension which has a balance equal to that of the deceased person’s pension at the time of their death.

Q: In a husband and wife SMSF where each has exceeded their transfer balance cap, should an existing reversionary nomination be replaced with a binding death benefit nomination?

Or is there any point at all in having a death benefit nomination if the only superannuation dependent (as defined) is their spouse (i.e. other than their spouse they only have adult, non-financially dependent children)?

The transfer balance cap relates to amounts you have used in your super fund to commence your pensions since 30 June 2017 including those in place on that date. If the combined amounts that you have used to commence the pensions exceed your personal transfer balance cap, then the ATO will require you to reduce any excess either by removing it from super or putting it back into an accumulation account.

Your personal transfer balance cap does not take into account any pension payments you have received, nor does it take any investment gains or losses that are made to your pension account. Therefore, the balance of your pension accounts may exceed your personal transfer balance cap if your fund has a successful investment performance.

For example, assume you commenced your first pension with $1.9 million in the 2023–24 income year then withdrew $100,000 as a pension payment and the fund earned $190,000 income. The amount you used to commence the pension of $1.9 million would be added as a credit to your transfer balance account. The withdrawal of your pension and the income earned by the fund are not counted for transfer balance account purposes even though your pension account balance has now increased to $1,990,000 ($1.9 million less $100,000 plus $190,000).

Whether you decide to make the pensions you and your wife are receiving reversionary or subject to a binding death benefit nomination depends on other factors, but they do have a link to both your transfer balance accounts. This can be illustrated as follows:

Assume you and your wife each commenced a pension with $1.9 million in the 2023–24 income year when the transfer balance cap is $1.9 million. In three years, the balance of both your pensions has grown to $2 million because of successful investments.

The amount counted for transfer balance cap purposes for each of you would remain as $1.9 million.

Then let’s assume that one of you was to die.

If the pensions were reversionary, the balance of the pension payable to the deceased person would be paid as a reversionary pension to the surviving spouse and counted against their transfer balance cap. The balance of the surviving spouse’s transfer balance account would then be $1.9 million, the amount used to commence their pension in 2023–24 and the balance of the deceased spouse’s pension which is $2 million. The amount counted against the surviving spouse’s transfer balance cap is now $3.9 million which exceeds their transfer balance cap. The surviving spouse is now faced with a decision of what should be done.

There are many options. One could be to commute their pension and transfer it to their accumulation account and partially commute $100,000 of the reversionary pension which would be drawn from the fund as a lump sum. The remaining $1.9 million would continue to be paid as the reversionary pension. The reason for withdrawing the lump sum from the reversionary pension is that death benefits paid to a surviving spouse that remain in the fund can only be paid as a pension and cannot be credited to the surviving spouse’s accumulation account. Another option could be for the surviving spouse to continue with the pension that they commenced in the 2023–24 income year and commute the reversionary pension to a lump sum. For transfer balance cap purposes, the reversionary pension is not counted against the surviving spouse’s transfer balance account until 12 months after the death of the original pensioner.

This is the advantage of having a reversionary pension, as it provides up to 12 months leeway before it has to be commuted.  

If it is decided that the reversionary pension nomination is replaced by a binding death benefit nomination the surviving spouse may have the choice of commencing a death benefit pension. If the combined amount of the pension commenced by the surviving spouse in 2023–24 plus the amount used to commence the death benefit pension is excessive, the options available are similar to those available for the reversionary pension. However, the amount of any death benefit pension that is commenced will be counted against the surviving spouse’s transfer balance account as soon as the pension commences.

Q: If there is no beneficiary nomination on an SMSF, what happens with members’ balances if both members (SMSF with two members) pass away?

If there is no beneficiary death benefit nomination or no valid nomination, the decision on how the superannuation benefit will be distributed is a matter for the fund’s trust deed and it may be up to the trustee of the fund to exercise discretion on who is eligible to receive the benefit.

Under the superannuation rules, death benefits must be paid to the dependants of the deceased at the time of the member’s death and/or their legal personal representative. Dependants at the time of the member’s death include the spouse or children of the member, someone with whom the deceased is in an interdependency relationship or a person who is ordinarily dependant on the deceased for support at the time of the member’s death.

Q: What are the material issues that a trustee must consider when deciding how to distribute a death benefit in the absence of a binding nomination?

I assume you are referring to the decision to distribute a death benefit as a trustee of a self-managed superannuation fund (SMSF).

When considering the distribution of a death benefit by an SMSF the first place is to read the death benefit provisions of the fund’s trust deed. It will usually tell you what occurs to the payment of a person’s benefit on their death. In the absence of a binding death benefit nomination, you may find that the trust deed gives the fund trustee discretion to distribute the member’s death benefit as permitted by the superannuation legislation to the member’s dependants at the time of their death and/or the member’s legal personal representative.  

Q: What happens to the balance of account-based retirement funds of a couple where they have nominated each other as reversionary beneficiary, but they both pass away at the same time (i.e. in an accident where they were together)?

What will the trustee(s) do in these extraordinary circumstances? Will the monies be directed to the children of the couple by default?

Where a couple who are both in receipt of an account-based pension die simultaneously and they had nominated each other as reversionary beneficiary, the payment of the benefit would depend on a number of factors.

If the fund was a large fund, it would be up to the fund’s trust deed and the trustee decision on payment of the benefit. It is common that the trustee pays the benefit, consisting of the remaining balance of the account-based pension, to the legal personal representative of the respective member for distribution in accordance with their Will.

If the fund is an SMSF, it is possible to make a direction to the trustee of the fund as a binding death benefit nomination. The nomination could direct the trustee that if the nominated reversionary has predeceased the pensioner, the trustee is required to pay the balance of the pension to nominated dependants and/or the respective pensioner’s legal personal representative. It would be worthwhile to seek legal advice on whether the fund’s trust deed requires amendment and the appropriate wording of the binding nomination.

Q: If you only nominate a dependent as beneficiary and the beneficiary predeceases you, how does the trustee determine who is your legal representative?

The payment of the death benefit where a beneficiary or beneficiaries predecease the member will depend on the provisions of the fund’s trust deed. It will then be up to the trustee to identify the member’s dependants and/or legal personal representative so they can determine who is eligible to receive the death benefit.

The trustee can determine the member’s legal personal representative from their Will or, if probate has been paid in respect of the member’s estate, the executor will be included in the notice of probate. If the member does not have a Will, it may be necessary for interested parties to apply to the court for letters of administration which will appoint someone to administer the member’s estate.

Q: Do children living away from home earning their own income classify as dependants?

All children of the deceased are ‘dependants’ for superannuation purposes, with one exception as indicated below. A child includes an adopted child, a stepchild or an ex-nuptial child of the person.

At common law, a stepchild means a child of a husband or wife by a former marriage. The continued existence of a stepchild/stepparent relationship depends on the continuity of the marriage of the child’s natural parent with the stepparent. If the marriage ends, either by divorce or death, the stepchild/stepparent relationship will cease (see ATO ID 2011/77)

Q: Can two disabled brothers who have lived together all their lives nominate each other as their beneficiary of their super pensions as interdependants?

It is possible for two disabled brothers to nominate each other as dependants if they are in an interdependency relationship.

An interdependency relationship exists between two people if all the following conditions are met:

• They have a close personal relationship
• They live together
• One or both provides the other with financial support
• One or both provides the other with domestic support and personal care.

If these conditions are met at the time of the death of one of the brothers, they would be in an interdependency relationship and the surviving brother would qualify as a ‘dependant’ for superannuation purposes.

Q: Is there a way to give some of my super after my death to my partner who I don’t live with?

I have a son who is 25 who I believe would otherwise receive all of my super (minus the tax he would have to pay).

Whether it is possible for some of your super to be paid to your partner would depend on whether they meet the definition of ‘dependant’ under the superannuation law. Under that law death benefits are required to be paid to either or both of the dependants of the deceased at the time of the member’s death and/or their legal personal representative.

Dependants at the time of the member’s death include the spouse or children of the member, someone with whom the deceased is in an interdependency relationship or a person who is ordinarily dependent on the deceased for support at the time of the member’s death. Whether your partner would qualify as a dependant would most likely rely on whether you are in an interdependency relationship with them, or it could be established that they were ordinarily dependent on you for support. These all depend on the circumstances of the relationship and other determining facts.

If your partner was unable to establish that they were your dependant under the superannuation definition at the time of your death, your son may be the sole beneficiary. You may like to seek advice from a specialist in this area who could examine your exact circumstances more closely and provide a solution to what you are trying to achieve.

Q: How can an Enduring Power of Attorney (EPoA) holder be nominated as a beneficiary, given that on death an EPoA is no longer a valid document?

I was of the understanding that the Will carries on from an EPA.

Just to clarify, when a person has been granted an EPoA the superannuation legislation allows them to become a trustee or director of the corporate trustee of the self-managed super fund (SMSF) in place of the member. This can occur when the member is under a legal disability, for example, when they are unable to manage their own affairs or when the member has granted the person an EPoA power of attorney. An EPoA ceases on the death of the member.

The fact that the person has been granted an EPoA does not automatically authorise them to become a trustee or director of the corporate trustee of the fund. The appointment of the person as trustee or a director of the corporate trustee is subject to the terms of the fund’s trust deed which may require approval by the remaining members or trustees.

On the death of a member the executor of the member’s estate will then assume the role of their legal personal representative. The timing of the executor’s appointment will depend on the fund’s trust deed and may depend on the granting of probate to confirm the appointment of the executor.  

The granting of power of attorney does not authorise the holder to become a beneficiary or member of the fund. Membership of the fund is determined by the rules set out in the fund’s trust deed and a beneficiary is a person nominated by a member to receive a benefit on the member’s death if they qualify under the superannuation legislation.

Q: Can someone with your power of attorney deal with your super while you are alive, so pull it out before your death?

It is possible for a member of a super fund to appoint a person under an enduring power of attorney (EPoA) to make decisions on their behalf in relation to their financial affairs which includes superannuation.

Under the EPoA, the member can set the terms of the power to commence at a particular time or for particular matters. For example, an EPA may activate if the member is mentally incapacitated and only in relation to their financial affairs.

For an attorney to withdraw super benefits, it will continue to be subject to the superannuation legislation which requires a condition of release to be satisfied prior to the payment being permitted. For example, a condition of release is satisfied if the member is retired for superannuation purposes after reaching their preservation age, is permanently disabled, has reached age 65 or they have died.

Q: Consider an SMSF with two members who are also both trustees: one is a parent in pension mode and the other a son in accumulation mode with power of attorney. How is the parent’s fund handled when they pass away?

Based on what you are saying, you (the parent) and your son are trustees and members of an SMSF. Your son, I assume, has been granted an enduring power of attorney which will allow him to act in your place as trustee should something happen to you such as loss of legal capacity.

If the SMSF’s trust deed allows binding death benefit nominations to be made by the members, then benefits would be distributed as directed in the nomination made by the parent. The persons nominated in the death benefit nomination would be limited to relevant dependants and/or the member’s (parent’s) legal personal representative.

Q: How often have courts overturned a binding nomination in Western Australia?

This is a very difficult question to answer as there have been many cases on death benefits and nominations made by the deceased which have been regarded as valid and others which have been considered invalid. The reasons for the decision of the courts and tribunals Australia-wide are based on the facts of the case as they relate to the principles of equity and do not relate only to statute.  

Two relatively recent cases which have their source in the Western Australia courts are Hill v Zuda and Burgess v Burgess. The case of Hill v Zuda was ultimately determined in the High Court and involved an interpretation of the Superannuation Industry (Supervision) Act while Burgess v Burgess involved a conflict of interest in the payment of a death benefit to the surviving widow rather than to the estate of the deceased.

Here are the references to these cases:

• Hill v Zuda Pty Ltd as trustee for The Holly Superannuation Fund & Ors [2022] HCA 21

• Burgess v Burgess

Q: Do your Will beneficiaries override any beneficiaries stated in your super documents?

Your superannuation and your personal estate on your death are quite independent of each other. On your death, super is dealt with under the rules of the super fund and any death benefit nominations you may have made.

However, if your death benefit has been paid to your estate because you have nominated your legal personal representative, usually the executor of your estate, then they will have responsibility for distributing it as provided by your Will.

Q: How effective is a binding nomination in ensuring a smooth payment of death benefits?

Despite my wife making a binding nomination for me to receive 100% of her death benefit in her AustralianSuper account, I was forced to go through the process/application for payment to the fund, lodge a complaint with their internal complaints team and lodge a complaint with the ombudsman AFCA before the matter was finalised and resolved. Therefore, how effective is a binding nomination in ensuring a smooth payment of death benefits?

Whether a binding nomination is consistent with the fund’s trust deed and has been made validly comes to the circumstances of the case. Most nominations that are made by members result in trustees satisfying their wishes on their death.

In some circumstances, a difference of opinion may arise between a member, beneficiary or trustee on the validity of the nomination. All funds with more than six members are required to establish an internal review process which may be appealed to various complaints authorities, tribunals and ultimately the courts.

Q: What are the tax implications for making binding nominations to children (over 21) instead of a spouse?

The tax implications of making a binding death benefit nomination to children over 21 instead of a spouse are that:

• Children older than 18 who receive death benefits are taxed on the taxable component of the death benefit lump sum. The tax rate is 15% plus 2% Medicare. Also, the super rules require lump sums only to be paid to adult children. If the children receive the death benefit lump sum via the deceased member’s estate the tax rate on the taxable component of the lump sum is 15% but no Medicare is payable.
• A spouse is not taxed on a death benefit lump sum irrespective of whether the lump sum is paid directly or via the deceased member’s estate. If the spouse receives a death benefit pension, where either the spouse or the deceased is older than age 60, the pension is tax free to the recipient. However, if the spouse and deceased are both under age 60, the taxable component of the pension is taxed at ordinary personal rates less a tax offset equal to 15% of the pension that is taxed.

Q: If the beneficiary is a non-tax resident of Australia, how does tax apply to them?

If the recipient of the superannuation death benefit is a foreign resident for Australian tax purposes, they receive the same tax treatment as a resident. However, they are generally exempt from the Medicare levy.

The death benefit payment is considered Australian-sourced income. However, if the beneficiary is a tax resident of a country that has a double tax agreement with Australia, there may be no Australian tax imposed.

The beneficiary will need to check the taxation laws of their country and whether it has a tax treaty with Australia.

Here is a link to the ATO’s website concerning death benefits payable to foreign residents.

Q: Can the beneficiary be a company?

It is not possible for a company to be a ‘death benefits dependant’ (which is limited to individuals) and receive a superannuation death benefit from the fund.

Under the superannuation legislation, death benefits must be paid to either or both the dependants of the deceased and/or their legal personal representative. The legal personal representative of the deceased is required to distribute the death benefit in accordance with the Will of the deceased member. Dependants at the time of the member’s death include the spouse or children of the member, someone with whom the deceased is in an interdependency relationship or a person who is ordinarily dependant on the deceased for support at the time of the member’s death.