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Lump Sum Death Benefits

A deceased member’s superannuation death benefits may be paid out as a lump sum to any person. However, the taxation of the benefits depends on who the benefits are paid to, as shown in the following table.

 
Tax Treatment
Recipient Tax Free Component Taxable Component
A spouse (or former spouse) Tax Free Tax Free
Any child including adopted, step or ex-nuptial under 18 years Tax Free Tax Free
Any child including adopted, step or ex-nuptial 18 years or over Tax Free 17%
Any  person with whom the deceased had an interdependency relationship Tax Free Tax Free
Any person financially dependent on the deceased on their death Tax Free Tax Free
Any other person who was not financially dependent on the deceased Tax Free 15.00%

*The tax-free component consists of undeducted contributions, post 1994 invalidity, CGT exempt, pre-July 1983, and any after-tax contributions made from 1 July 2007.
**The taxable component is the total benefit paid less the tax-free component of the benefit.
It is important to note that a Death Benefit Agreement can not directly specify someone other than your spouse, child, person with whom you have interdependency relationship, or someone financially dependent on you. In this situation you must nominate the Legal Personal Representative of your Estate to receive your super benefit, who must distribute your benefit according to your Will. So your Will should specify the person to whom your super benefits are to be paid.