Taxes and Anomalies
For many in our society the mixture of tax and superannuation is an automatic conundrum, but there is one that confronts everyone with substantial funds invested in a super fund.
If you (or your employer) contribute to or have contributed money to your super fund, and claim or have claimed a tax deduction, that contribution is taxed at 15% going into the super fund. $1000.00 becomes $850.00 by magic!
That “taxed” deposit plus its earnings keeps its identity until the money comes out of the super fund together with all its earnings made during the years. It’s identified as a “taxed contribution”.
If that money, on the death of the member, goes to anyone other than a spouse or a dependent it’s TAXED AGAIN at the rate of 15%. YES, AGAIN! As long as you have a spouse or other dependent the answer is simple – leave this money to them in your will as a specific (i.e. identified) legacy.
If you don’t have, or expect to have, a spouse or dependents when you leave us, the way to avoid this double taxation is to close down your super fund and put the money in your bank account before you die.
The trick of course, is to get the timing right, but it can be done.