Self-managed super fund (SMSF) owners could be lumping their beneficiaries with tax liabilities that amount to tens of thousands of dollars, according to Lifeplan Funds Management.
The capital value of a whole death benefit paid to a beneficiary may be subject to tax, Lifeplan national adviser solutions manager Alison Massey said.
“There is a misconception that only income is taxed,” she said.
Lifeplan advised that those most affected were SMSFs which have reached the pension phase of paying out funds. While SMSFs are exempt from capital gains tax (CGT), the exemptions end when the last member of the fund dies, Massey said.
Lifeplan’s NextGen Investments, however, removes the ‘death duty’ that applies to funds transferred to non-dependents from a SMSF.
It enables beneficiaries to fund the tax liability if assets are held by the SMSF, thereby not requiring a forced realisation of assets.
Lifeplan said there are about 2,500 new SMSFs set up every month with an average balance of $454,000.
