Div 296 sparking death benefit discussions
The Division 296 impost has prompted SMSF members looking at retaining assets in super to consider the tax impact of their death on their beneficiaries.
.
More SMSF members are looking at the effect of death benefit taxes on their beneficiaries as part of their consideration around whether to move assets out of superannuation to avoid the impact of the proposed Division 296 impost, according to administration provider Heffron.
Heffron managing director Meg Heffron said recent discussions with clients on the Division 296 tax had expanded to include issues such as where to move assets outside of super and estate planning.
“One of the most useful things about Division 296 tax being threatened, even if it’s never introduced, is it’s really focused the mind of a lot of people who have kept money in super because it’s a good tax deal and don’t want to take it out, and the government doesn’t make them take it out anymore,” Heffron said during a recent practitioner briefing.
“What they’re doing is running the gauntlet on death benefit taxes.
“A lot of the conversations I’ve been having with clients about this has been: ‘If I have this tax, which doesn’t necessarily make me worse off in super than outside super, and with that money over $3 million I don’t mind taking it out of super because at least I’m protecting my beneficiaries from that death benefit tax.’”
She said the issue of death benefit taxes arises because if a member moves assets out of superannuation, they are dealt with by the will, but where they are retained in super, they can have an impact on those receiving a death benefit from the fund.
“One of the things that has the biggest detrimental impact on wealth is dying with a whole heap of money in super and no spouse to leave it to,” she said.
“Usually, if there’s no spouse, it’ll end up with adult children or other beneficiaries that are not dependants and they pay very high rates of tax on most death benefits and that will end up dwarfing any Division 296 tax.
“I think in the end, we’ll end up having a very productive discussion about death benefit taxes prompted by something completely different, which is Division 296.”
June 26, 2025
Jason Spits
smsmagazine.com.au
More Articles
Your 30 June superannuation checklist
Five easy ways to get more into your super fund before the end of the financial year With the end of the...
Check out what Uses the Most Internet Traffic: Data from 1994 to 2026
The evolution of global internet traffic from 1994 to 2026, tracking which technologies, platforms, and...
Minimum pension drawdown not the only thing to consider as 30 June approaches
As 30 June approaches, SMSF members drawing a pension need to think about meeting minimum drawdown obligations...
What’s your risk profile?
Understanding your risk profile is one of the most important steps you can take as an investor. It helps shape...
ASIC urges Aussies to check for unclaimed money
AISC is urging Australians to check if they have lost or unclaimed money, with approximately $2.7 billion...
PAYDAY SUPER STARTS 1 JULY 2026 – Planning guides
From 1 July 2026, super contributions will need to be paid at the same time as wages. . The current...
Six strategic investment moves for mid-career women
As women enter their mid-career years, many begin to earn more and have greater capacity to invest. Making the...
Commercial v residential: Be aware of ‘nuanced’ changes
The proposed capital gains tax changes announced in the budget are far more nuanced than the headlines...
Heathmont Financial Services Pty Ltd (ABN 68 106 250 104) trading as Heathmont Financial Services is a Corporate Authorised Representative (No. 262098) of Knox Wealth Management Pty Ltd (ABN 74 630 256 227), Australian Financial Services Licence Number (AFSL) 513763.
Julian McGoldrick is an Authorised Representative (No. 262098) of Knox Wealth Management Pty Ltd AFSL 513763.