I have heard that as my super beneficiary is my legal personal representative (to my will, which is my two grown children) they will be charged “death tax” of 32 per cent as they are older than 18 and not financially dependent on me.
Is it true, that before my demise, if I move the money from super to my bank account, there will be no “death tax”?
With regards the first part of your questions, death benefits tax is 15 per cent plus Medicare on the taxable component of your super, which for most people is not the entire balance. The effective rate of tax paid is therefore typically less than this. Whether the super passes directly to your children, or gets to them via a will should make no difference.
You are correct in noting that this death benefits tax could be avoided by withdrawing your super savings before your death. The challenge here is the timing. You don’t want to withdraw too early and then have your savings sitting in the bank earning a negligible return, and potentially being subject to income tax.
You should discuss your arrangements with your solicitor.
I am confused over the ATO six year rule regarding capital gains tax (CGT). I purchased a unit in April 2021 which was my home. I moved out in January 2025, and this unit has been rented out ever since. Will there be any CGT?
Thanks for your question, this rule can create confusion. In Australia, our home is exempt from capital gains tax. The six-year rule exists to allow for circumstances where someone leaves their home temporarily, for example for an interstate or overseas work assignment, but then contemplates returning in the future.
Note, there is no requirement to return. Although the property may be rented out during their absence, the capital gains tax main residence exemption continues for up to six years, provided the person does not acquire another main residence. This last part is the key. You can only have one main residence at any given point.
The answer to your question therefore hinges on what happened when you moved out in 2025. Did you buy another home? If so, that is now your main residence and the unit would be subject to capital gains tax. However, if you have been renting since, then the six-year rule could indeed apply.
As this is a tax matter, you should confirm your situation with your accountant.
I’m 37 and planning to buy a property in Sydney using an inheritance from Ireland. Will I pay tax on this in Australia? After clearing some debts, I’ll have about $130,000 left – should I contribute some to super or use it all as a property deposit (with a $750,000–$900,000 mortgage)?
There is no tax applied to inheritances in Australia, so you are all clear on that front.
My inclination would be to use all the funds to help with the home purchase. Having more available here may remove the need for lenders insurance (which is a cost you bear), and improve the interest rate you can access.
Historically residential property values have risen over time, so assuming that continues, you are improving your ability to acquire an asset which is growing in value, and is capital gains tax exempt.
In the later stages of life, if you haven’t been able to accumulate enough super to provide for your needs, the equity in your home could be accessed either via a downsize, or reverse mortgage.
Paul Benson is a Certified Financial Planner at Guidance Financial Services. He hosts the Financial Autonomy podcast. Questions to: paul@financialautonomy.com.au
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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Paul Benson is a Certified Financial Planner, and host of the Financial Autonomy podcast.
