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Superannuation: From Tax-Free Opportunities to the Challenge of the Death Tax

Picture of Roger Perrett

Roger Perrett

Executive Financial Advisor

Embarking on the journey of investing in your superannuation is like setting sail on the seas of financial freedom. The prospect of tax-free growth and building a nest egg for the future is undeniably enticing. But, as with any voyage, unforeseen challenges may arise, and one such challenge lurking on the horizon is the ominous “death tax” on superannuation benefits.

The Positive Prelude: Tax-Free Investing in Superannuation

Let’s start with the positive – the incredible opportunity that superannuation presents for tax-free investing. It’s a financial landscape where your investments can grow without the burden of immediate taxation, allowing you to harness the power of compounding over time. This favorable tax environment is a beacon for savvy investors looking to secure their financial future.

The Unveiling of the Challenge: The Death Tax

However, as the plot thickens, a formidable challenge emerges – the so-called “death tax” on superannuation benefits. This tax, formally known as the “tax on concessional contributions,” can cast a shadow over the otherwise sunny prospect of tax-free growth. The crux of the matter lies in what happens to your superannuation benefits after you’re gone.

In essence, when your superannuation is passed on to your beneficiaries, they may be subject to this death tax. The tax is applicable to the ‘taxable components’ of your super, and the rates can vary depending on the relationship between the deceased and the beneficiary.

Navigating Troubled Waters: Three Ways to Reduce the Death Tax

Amidst the stormy seas of the death tax, there are, thankfully, ways to navigate and potentially reduce its impact. Here are three strategies to consider:

  1. Spend all of your super: It maybe a little obvious but this tax is only a potential tax. If you withdraw all of your money for living expenses, there is no money left to tax, so the issue goes away.
  2. Strategic Withdrawals: If you were ever advised by a doctor to ‘get your things in order’ because you were terminally ill, withdrawing the funds prior to you passing away will mean the funds can be withdrawn tax free. This is in contrast to the funds being withdrawn from after you pass away when the tax could be 17% for your beneficiaries.
  3. Obtain Advice: There is a strategy that can be implemented in several ways, that can minimise the ‘death tax’. We can provide advice for you on the best strategy and the great news is that depending on your age, we can reduce this tax substantially.

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The Positive Finale: See Us as Your Financial Advisor

In the face of the death tax challenge, remember that you don’t have to navigate these waters alone. Think of us as your trusted financial advisors, ready to assist you in charting a course that aligns with your financial goals. With careful planning and strategic decision-making, you can mitigate the impact of the death tax and continue sailing towards the shores of financial security.

In conclusion, while the death tax may be a formidable adversary, it is not insurmountable. By understanding the landscape, implementing strategic measures, and seeking guidance from experienced financial advisors, you can ensure that your superannuation benefits leave a lasting legacy without being unduly taxed.


This information is general advice. We have not considered your objectives, personal or financial circumstances. You should consider the appropriateness of the advice for your circumstances before making any decision. You should obtain and consider the relevant Product Disclosure Statement and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.

Past performance is not an indication of future performance.

This presentation has been prepared and presented by Roger Perrett, Freshwater Wealth Management Pty Ltd CAR no.1307016, Alliance Wealth Pty Ltd AFSL No.449221. This information cannot be used or copied in whole or part without our express written consent.

While every effort has been made to ensure the accuracy of the information, it is not guaranteed. It is based on our understanding of regulations and laws as at the publication date. As these are subject to change you should talk to a professional adviser for the most up-to-date information.

To the maximum extent permitted by law, no person including Alliance Wealth Pty Ltd nor its related entities, employees or representatives accepts responsibility for any loss suffered by any person arising from reliance on this information.

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