November 2012 Newsletter

In this edition:

Welcome

Buying a Business: Asset or Share Purchase?

Tax certainty for deceased estates

Do your adult children have a back-up plan (other than you)?

Superannuation contributions cap for individuals 75 and over

Background

The release of draft taxation ruling TR 2011/D3 in July last year caused much concern when it suggested that the pension exemption ceases automatically upon death (unless a dependent beneficiary is automatically entitled to receive a pension).

Accordingly, if an SMSF member died with assets carrying unrealised capital gains, even if the deceased were receiving a pension before death, upon death the pension would cease in certain circumstances. If SMSF assets were then sold/transferred, the SMSF would have tax implications.

Proposed Changes
Last month in the Governments Mid-Year Economic and Fiscal Outlook announcement the Government announced that it will amend the law to allow the pension earnings tax exemption to continue following the death of a pension recipient until the deceased member's benefits have been paid out of the fund.

This will benefit the beneficiaries of deceased estates by allowing superannuation fund trustees to dispose of pension assets on a tax-free basis to fund the payment of death benefits. It will also avoid the need for funds to rework tax calculations following the death of members in the pension phase.

These changes are proposed to apply to the 2012-13 and later income years.

In the coming months we will delve deeper into what happens to your Superannuation when you die and how best to plan for this event to maximise your death benefits.