Complex provision scrapped in budget
The government has announced it intends to remove the “outdated” anti-detriment provision.
According to budget papers, the anti-detriment provision can effectively result in a refund of a member’s lifetime superannuation contributions tax payments into an estate, where the beneficiary is the dependant of the member.
Currently, this provision is inconsistently applied by superannuation funds.
From 1 July 2017 the government plans to no longer allow funds to claim this as a deduction.
“This will ensure consistent treatment of lump sum death benefits across all superannuation, which aligns with the treatment of bequests outside of superannuation,” the budget papers said.
According to Perpetual, in the future, without an anti-detriment payment and a limited ability to implement a withdrawal/re-contribution strategy, this effectively means “death taxes are back for adult children”.
