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Unintended consequences of simpler super
A technical expert within Centric Wealth has warned that close attention needs to be paid to the capital gains tax (CGT) implications flowing from the Federal Government’s new simpler super changes.
Centric Wealth’s technical research manager Marie Esler said while much had been written about the taxation treatment of death benefits to non-dependents, she believed the CGT implications had been overlooked.
“Under the new laws, we believe all lump sum payments on death of a self-managed superannuation fund member receiving a pension could result in CGT,” she said.
Esler said another area of concern was the taxation of group life and total and permanent disability insurance policies outside of super.
“These policies, which were taken out by employers on their employees’ behalf in the event of death or total and permanent disability, are currently tax free up to the pension reasonable benefit limit of $1,356,291,” she said. “However, under the new rules they fall under ‘employment termination payments’ and are subject to the highest marginal tax rate of 46.5 per cent for amounts above $140,000.”
Esler said this enormous hike in tax seemed a very unfair way to deal with someone’s life and livelihood.
AUTHOR
Mike Taylor
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