Tax on superannuation death benefits
Published Date: 19 Jun 2026
This article examines the taxation of lump sum superannuation death benefits paid to non-tax dependants, focusing on adult children who qualify as SIS dependants but not tax dependants. It compares the outcomes where death benefits are paid directly from a superannuation fund or indirectly via the deceased estate. Although the same maximum tax rates apply to the taxable components in both cases, the method of payment can result in materially different tax liabilities and financial outcomes. Particular attention is given to the impact on assessable income, PAYG withholding, the Medicare levy, and broader flow-on effects for individual beneficiaries. In contrast, estate-based payments can mitigate these consequences and, in some cases, reduce overall tax. The article also identifies other non-tax issues and risks that should be considered when considering whether to pay a death benefit directly or via the estate.
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- Published By: Linda Bruce
- Published On:19 Jun 2026
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