ATO ruling ups death tax liability

[austini]

ATO ruling ups Superannuation death tax liability

Saw this today on Business Spectator site:

"Spouses and children face the prospect of significant tax bills upon the death of a parent or partner following a ruling by the Australian Taxation Office (ATO), according to a report by the Australian Financial Review.

The ATO ruling clarifies the manner in which pension assets will be treated following a death, and mean that private pensions are no longer tax-free upon the death of a pensioner and that any beneficiaries will have to pay capital gains and income tax on the assets, the report said.

Additionally, when the beneficiary is an adult child, the recipient will have to pay additional taxes on top of the 16.5 per cent death benefits tax. ..."

 

[Rolf Latham]

Nice

tax on tax on tax.

Even more incentive to not be bothered to provide for ones own retirement, now where was that Winnebago ad again............

ta
rolf

 

[BV]

Rolf

I agree, we are getting hit from all directions.
After this news I think I'll have to cancel my contributions to super.

 

[austini]

Below is a response to my thread on another forum:

"The headline on the front page of the AFR today was “ATO ruling confirms tax liability after death” and the article pointed out that SMSFs would be hit the hardest with tax bills because of the ATO view.

The ATO has released a draft tax ruling which outlines their view of what happens from an income and capital gains perspective when a pension payable from a fund ceases to be payable.

But rather than being a new and controversial view the ATO is simply confirming what many practitioners in this area have understood to be the case. On the death of an SMSF pensioner, the pension ceases, and unless there is someone else automatically entitled to receive the pension, the income tax exemption for pension funds ceases. The main impact of this can be the effective re-introduction of capital gains tax, and sometimes the potential tax bill can be many tens of thousands of dollars.

So can you do anything to avoid this tax?

The answer is yes and involves making sure that SMSF beneficiary nominations are correctly designed to meet the ATO requirements, making sure that SMSF trustees apply careful tax management annually and planning pension payments properly."

I don't know enough of the detail but maybe avoiding the tax just comes down to careful planning

Cheers - Gordon

 

[Aaron_C]

The two certainties in life all in one nice package....

 

[manoj]

Hi

There some advanced strategies which one can use to counter this new tax - My paper is ready and i have booked a hall at 25 The Cresent Homebush Sydney for 3rd August 2011 Wednesday 6 PM for a presentation.

Those who are interested should visit the below page to book

http://www.trustdeed.com.au/seminar.asp?link=seminar


Manoj Abichandani
SMSF Specialist Advisor
SMSF Specialist Auditor

 

[BV]

Manoj
Is the presentation on the 3rd or the 30th?
Your website only has the 30th shown for Penrith

 

[pursefattener]

Where can one find up to date detail on how this tax is applied ?

 

[Deltaberry]

Saw this today on Business Spectator site:

"Spouses and children face the prospect of significant tax bills upon the death of a parent or partner following a ruling by the Australian Taxation Office (ATO), according to a report by the Australian Financial Review.

The ATO ruling clarifies the manner in which pension assets will be treated following a death, and mean that private pensions are no longer tax-free upon the death of a pensioner and that any beneficiaries will have to pay capital gains and income tax on the assets, the report said.

Additionally, when the beneficiary is an adult child, the recipient will have to pay additional taxes on top of the 16.5 per cent death benefits tax. ..."

And if you try to evade it you will be subject to 20 year prison terms.

Meanwhile if you try to kill someone, you'll only get 7 years.
http://www.heraldsun.com.au/news/mo...-to-kill-husband/story-fn7x8me2-1226161592808

Welcome to Greedland, I mean Australia.

 

[Deltaberry]

The two certainties in life all in one nice package....

Only in Greedland my friend.

Regards
Expat

 

[pursefattener]

There some advanced strategies which one can use to counter this new tax

What are some of these strategies apart from what Austini has out lined ? Other than gifting etc .

 

[Aaron Sice]

Below is a response to my thread on another forum:

"The headline on the front page of the AFR today was “ATO ruling confirms tax liability after death” and the article pointed out that SMSFs would be hit the hardest with tax bills because of the ATO view.

The ATO has released a draft tax ruling which outlines their view of what happens from an income and capital gains perspective when a pension payable from a fund ceases to be payable.

But rather than being a new and controversial view the ATO is simply confirming what many practitioners in this area have understood to be the case. On the death of an SMSF pensioner, the pension ceases, and unless there is someone else automatically entitled to receive the pension, the income tax exemption for pension funds ceases. The main impact of this can be the effective re-introduction of capital gains tax, and sometimes the potential tax bill can be many tens of thousands of dollars.

So can you do anything to avoid this tax?

The answer is yes and involves making sure that SMSF beneficiary nominations are correctly designed to meet the ATO requirements, making sure that SMSF trustees apply careful tax management annually and planning pension payments properly."

I don't know enough of the detail but maybe avoiding the tax just comes down to careful planning

Cheers - Gordon

if you're 85 and knocking on heaven's door, wouldn't you add your 55 year old kids to the fold and allow them to draw a pension / asset sale, thereby eliminating the extra tax?