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The tax-free component of a superannuation death benefit is not subject to tax, regardless of whether the beneficiary is a dependant or non-dependant.
This is an ATO Schedule which is only lodged if the taxpayer received more than one payment of a Superannuation lump sum. In order that Tax can calculate a correct Superannuation Lump sum tax offset in all circumstances, additional fields have been incorporated into the ATO PL schedule to collect that information.
Apart from normal Superannuation Lump Sum payments, taxation of the amount received and the offset available differs for lump sums received from an Untaxed Source (Untaxed Plans) of which a member may have more than one, to consider and three different ETP caps to manage.
The ATO Superannuation Lump Sum schedules (PL) may only be lodged electronically. It cannot be lodged as a facsimile schedule. The PL will only be lodged electronically where there is more than one Superannuation Lump Sum transaction.
To prevent the incorrect calculation of tax on taxable income and of the superannuation lump sum offset, a special message regarding the taxed element of a Superannuation death benefit payment made to a dependant is provided as follows:
Information for death benefit payments:
The Taxed Element of a Superannuation lump sum death benefit paid to a dependant of the deceased (or to a non-dependant of the deceased where the deceased was a member of the Australian Defence Forces or the Australian Police force killed in the line of duty and who is considered a dependant for these purposes) is non-assessable non-exempt income and should not be entered in this work sheet.
Tax Pre-fill
This schedule can be pre-filled using the Pre-fill Manager. The Pre-fill Manager enables you to download pre-fill reports for clients using the Practitioner Lodgment Service (PLS). You can view these reports in PDF format, and populate the pre-fill information into the client's Tax return. For more information on pre-filling, see Pre-fill Manager.
Tax Pre-fill is dependant on available ATO data. Validate the Tax return by pressing [F3] for a list of the imported values and any errors before lodgment.
| Field | Description |
|---|---|
| Did you receive a Super Lump sum payment in a previous year for which you received a Superannuation lump sum tax offset? (If the payment is a Death Benefit answer No to this question.): | This is a mandatory question and must be answered. |
| Check or enter previously used amounts | If your client has reached preservation age but has not yet reached 60 years and has received a previous payment or payments from a Superannuation fund that attracted a lower rate of tax which resulted in the taxpayer receiving a Superannuation lump sum tax offset, enter Y in the check-box and enter the amount of the Super lump sum that attracted the lower rate of tax or if the lump sum payment was made in the immediately prior year, click the Update prev. used amounts button and Tax will review last year's estimate and pre-fill such an amount in the appropriate field. |
| Field | Description |
|---|---|
| Payer’s Name | This field is for information and record keeping purposes only and will not be transmitted to the ATO electronically. |
| Payer’s Australian Business Number: | This is a mandatory field. Enter the ABN exactly as it is printed on the payment advice. |
| Payment Date | Transcribe the date as detailed on the payment summary. |
| Tax withheld | Transcribe the tax withheld amount as detailed on the payment summary. |
| Taxable Component | The taxable component comprises an element taxed in the Fund and an element untaxed in the Fund:
|
Is this payment subject to an Untaxed Plan cap? | Answer the question Yes or No as applicable. If you answer Yes to the first question and enter an amount in one of the three Untaxed Plan fields, this field will be closed to edit. |
| If more than one Untaxed Plan, the number of this Plan | As members may have more than one Untaxed Plan, enter the number (1 to 3) in this field. If you answer Yes to the first question and enter an amount in one of the three Untaxed Plan fields, the number of that Plan will be defaulted to this field and the field will be closed to edit. |
| Is this payment a death benefit? | This question will be open to edit if the Untaxed Plan question is blank. Answer Yes or No as applicable. |
| Are you are dependant of the deceased? | Answer this question Yes or No as applicable. |
| Was the deceased a member of the Australian Defence forces or Australian Police Force or Protective Services who died in the line of duty? | If the answer to this question is Yes, then the Non-dependant is considered to be an Eligible non-dependant. Eligible non-dependants of deceased members of the Australian Defence force and Australian police forces (including Australian Protective services) who have died in the line of duty are to be treated as dependants for tax purposes. |
These fields keep track of the amounts of the cap that have been reached and will be used in the estimate to calculate the correct excessive component, and ultimately the ETP offset. Amounts in excess of the caps are taxed at top marginal rates (45% plus Medicare levy 2% plus 2% TBRL (see note)).
| Field | Description |
|---|---|
Excess over the Low rate cap | This field is controlled by Tax and is closed to edit. |
Excess over the Untaxed plan cap | This field is controlled by Tax and is closed to edit. |
For the three income years ending 30 June 2015, 2017 and 2018 an additional tax of 2% may be applicable to certain termination or lump sum payments received on termination of employment but will have an offset applied to limit the tax to the specified amount.
Scenario
Your client, Greg, receives a Superannuation lump sum payment with a Taxable component, Taxed element of $12,000 from his Super Fund.
Procedure
The work flow for entering these payments is the same as for entering superannuation lump sum payment advices, although there are slight differences in wording and a field to indicate whether the deceased was 60 years or over at the time of death. This information is required in order to calculate the correct Superannuation lump sum tax offset.
- GoTo item 8 in Greg’s individual return and:
If Greg has only received one Superannuation Lump Sum payment statement, you may enter the details directly at the labels in the return,
orIf you want to keep a record of the details of the payment, at the label: click the label or [Alt+S] or the Schedule icon to open the worksheet.
When you have entered all the details, to save and close the worksheet and allow integration to the labels in the return, press [F6] or click Save.
If your client receives more than one Superannuation lump sum payment create a new transaction for each such payment following the above Steps. If your client has received more than one Superannuation lump sum payment, the PL schedules will be lodged electronically.
CCH References
11-120 Superannuation lump sums and superannuation income streams
11-220 Taxation of benefits from a taxed source
11-240 Taxation of benefits from an untaxed source
11-270 Superannuation death benefits
11-280 Taxation of superannuation death benefits
Related topics
Item 8-Australian superannuation lump sum payments
For a PDF version of the Superannuation lump sum schedule PL showing ELS tags and Tax codes click this link - Tag image PDF
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