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Super lawyer finds unintended fallout
A superannuation expert believes the Government will need to make further legislative amendments to its so-called simplifying superannuation bills, including changes to the taxation status of non-dependants, in order to ensure there are no unintended consequences.
, a partner with legal firm , said the taxation treatment of money paid to non-dependents is unfair and should be changed with the current raft of legislation.
“A major issue with the superannuation legislation that has been raised with the Government is death benefit payments,” he said.
“When a member dies, the death benefit paid to dependents is tax free, but if it is to adult children who are non-dependents the funds would be taxed as non-earned income.”
Callaghan said this could be at either 15 or 30 per cent depending on childrens’ circumstances.
The sum paid to children could also be boosted if the member had a life policy linked to the fund.
The policy will pay the benefit to the fund, which in turn passes it to the children, who again would see it treated as unearned income.
“This is an abnormality that has been raised but nothing is happening,” Callaghan said.
“The Senate report on the superannuation changes noted it but passed it back to the Government saying it was fiscal policy.”
He said it was an anomaly that has become entrenched and it was “disappointing the committee didn’t do anything about it”.
AUTHOR
Mike Taylor
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