ATO ID 2015/17, released late last week, sets out the ATO view that a super trustee can choose to claim a deduction for the “future service portion” of the death benefit and this choice can be made after the member has died, according to Michael Hallinan, special counsel at Townsends Business & Corporate Lawyers.
The choice must be made in the tax return for the financial year in which the death benefit is paid, Mr Hallinan explained.
Choosing to claim a deduction for the future service portion can provide the fund with a significant tax loss, which can be offset against current or future assessable income, he added.
“This choice is instead of claiming a tax deduction for the premium. Further it seems that the choice can be made even if a deduction for the premiums was made in the preceding year. However, once the choice is made, it applies to all members and applies to future financial years (unless the ATO consents),” Mr Hallinan said.