Super death benefit tax calculator
Work out tax on inherited superannuation — lump sum to tax dependant, non-tax-dependant direct, via LPR estate, or reversionary pension. Surfaces the Medicare saving available by routing through the estate.
Benefit components ($)
Check the member's statement — most funds show tax-free, taxed-element and (rarely) untaxed-element splits.
Always tax-free to any recipient, any form.
From a standard APRA-regulated fund (most common case).
Rare — untaxed public-sector / constitutionally protected funds.
| Component | Amount | Rate | Tax |
|---|---|---|---|
| Taxed element — non-tax-dependant direct (15% + 2% Medicare) | 500,000.00 | 17.0% | 85,000.00 |
| Route | Total tax | Net to non-dep |
|---|---|---|
| Direct from fund | 85,000.00 | 415,000.00 |
| Via LPR / estateSaves Medicare | 75,000.00 | 425,000.00 |
Paying the benefit to the estate avoids the 2% Medicare levy on the taxable component, saving 10,000.00 on this benefit. It only works where the will directs the super to non-tax dependants via the estate — a valid binding death benefit nomination to the LPR is usually required.
An adult child (18+) qualifies as a SIS dependant and can receive the lump sum, but is NOT a tax dependant unless separately financially dependent or in an interdependency relationship. This is the most common cause of unexpected death-benefit tax.
| Recipient / form | Taxed element | Untaxed element | Tax-free component |
|---|---|---|---|
| Lump sum — tax dependant | 0% | 0% | 0% |
| Lump sum — non-tax dep direct | 15% + 2% Medicare = 17% | 30% + 2% Medicare = 32% | 0% |
| Lump sum — via LPR / estate | 15% (no Medicare) | 30% (no Medicare) | 0% |
| Income stream — either 60+ | 0% | Complex — see adviser | 0% |
| Income stream — both under 60 | Marginal − 15% offset | Complex — see adviser | 0% |
The most common planning failure involves adult children. Under the SIS Act an adult child is a dependant and can receive a super death benefit directly from the fund. But under the tax law (s 302-195) an adult child is not a tax dependant unless they were actually financially dependent or in an interdependency relationship.
For a retiree with $800,000 in super ($50,000 tax-free + $750,000 taxed element) paid to two adult children:
If you're retired, over preservation age, and have mostly taxable-component super, consider re-contributing withdrawn amounts as non-concessional contributions to convert taxable component into tax-free component. Annual non-concessional cap is $120,000 for 2025-26 (or up to $360,000 using the bring-forward rule). The resulting tax-free component is always tax-free in death benefit hands, removing the 17%/15% tax on any component you can convert. Only effective for people under 75. Speak with an adviser, as it interacts with transfer balance cap, work test rules for 67–74 year olds, and Division 296 (from 1 July 2026).
"Financial dependency" is the grey area most often litigated. The ATO applies a substantiality test: would the person survive day to day if your support were withdrawn? The support must be directed at the necessities of life — food, shelter, school fees. Quality-of-life supplements (entertainment, hobbies, pocket money, social outings) do not count. If an adult child lived at home and you paid all the bills, that typically qualifies. If you just helped with a phone bill or gave pocket money, it does not.
Funds used to be able to top up death benefits with an anti-detriment payment — effectively a refund of 15% contributions tax paid over the deceased's working life. This was abolished for deaths on or after 1 July 2017 and no payments could be made for any death after 1 July 2019. Older online advice still mentions it. Today, no anti-detriment payments are available under any circumstances.
Is inherited superannuation taxable in Australia?
Who is a tax dependant under s 302-195?
What is the difference between a SIS dependant and a tax dependant?
What is the Medicare levy trap and how does LPR routing help?
When is a death benefit income stream tax-free?
What is the untaxed element and when does it apply?
Can I still claim an anti-detriment payment?
Tax Accuracy & Sources
Models the four standard death benefit payment paths under Div 302 ITAA 1997 for a standard APRA-regulated super fund. Does not model low-rate cap / untaxed plan cap for income streams, transfer balance cap interactions, SMSF illiquid-asset valuation issues, or binding death benefit nomination lapses.