The Minister for Financial Services on Tue 29.1.2013 released a draft regulation to give effect to the Government’s 2012-13 MYEFO announcement to provide tax certainty to the beneficiaries of deceased estates.
Investment earnings derived by super funds from assets supporting pensions are exempt from tax. A draft ruling issued by the ATO in 2011 [Draft TR 2011/D3] led to some uncertainty over eligibility for this tax exemption following the death of a member to whom a pension was being paid.
To address these concerns, the Government announced on 22 October 2012 that it would 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 (subject to the benefits being paid as soon as practicable). The Minister said the proposed regulation would ensure that investment earnings on superannuation benefits that were supporting a pension will continue to be tax-exempt following the death of the pension recipient until the benefits are paid out of the fund.
DATE OF EFFECT: The changes would apply to the 2012-13 and later income years.
The draft regulation and associated explanatory material can be found on the Treasury website.
COMMENTS are due by 14 February 2013.
Source: Minister for Financial Services media release No 001, 29 January 2013
[LTN 18, 29/1/13]