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Will my beneficiaries pay tax after I die?

I have been told that if my assets inside my pension fund are there when I die, they will be subject to capital gains tax and my beneficiaries would have to pay it. So does that mean if I had $1 million dollars of assets and the tax is 10 per cent my descendants would have to pay $100,000? That sounds unbelievably draconian but I have read media reports that suggest this is true. Tell me that they are wrong.

We had a question just like this on my 2GB Super Show and so some media reports must have left the idea that the potential slug from this tax was going to be horrendous.

What actually happens is when you die (pardon my directness but it’s the easiest way of explaining it), the responsible party tidying up your affairs will get an actuarial statement that will take the date you passed away and the date when the actuary set to work looking at the pension fund’s assets. Then the amount that your assets have grown by over that time period is assessed and the 10 per cent capital gains tax, which is appropriate for these pension-related assets, is applied.

And so if your million dollars grew by $50,000 over the six months needed to sort out your affairs, then the tax would be only $5000. The difference between $100,000 and $5000 is quite considerable and it shows the value of becoming more confident about the many rules covering super. As super rules can be so confusing, I have created the Switzer Super Report, which aims to help people with self-managed super funds understand the whole superannuation game.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Wednesday, March 14, 2012

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