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Death benefit payments

Section: 6.4

Death benefit payments to non-dependants:

Age of deceased Type of death benefit Age of recipient Taxation treatment
Any age Lump sum Any age Amount taxed in the fund taxed up to a maximum rate of 15%. Element untaxed in the fund is taxed at 30%
Any age Income stream Any age Cannot be paid as an income stream. Income streams that commenced before 1 July 2007 are taxed as if received by a dependant.

Death benefit payments to dependants:

Age of deceased Type of death benefit Age of recipient Taxation treatment
Any age Lump sum Any age Tax-free (not assessable, not exempt income)
Aged 60 and over Income stream Any age Element taxed in the fund is tax-free. Element untaxed in the fund is  taxed at marginal rates with offset of 10% of the element untaxed in the fund.
Below age 60 Income stream Above age 60 Element taxed in the fund is tax-free. Element untaxed in the fund is taxed at marginal rates with offset of 10% of the element untaxed in the fund.
Below age 60 Income stream Below age 60 Element taxed in the fund is taxed at marginal rates with offset equal to 15% of the amount. Element untaxed in the fund is taxed at marginal rates.

This technical resource is intended for the use of financial advisers only. It is current as at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements. 

Last modified: Thursday, August 27, 2020