In an attempt to generate more savings, the Australian government is planning to abolish a superannuation tax refund that was first introduced by the Keating government back in 1988.
The concession, also known as an anti-detriment payment, is designed to boost the retirement nest eggs of a deceased person.
It is a refund of the 15 per cent contributions tax that the deceased individual paid during the accumulation phase, which is added to the super nest egg returned as a death benefit to the deceased’s beneficiaries.
Eligible beneficiaries of the refund are the deceased’s spouse, former spouse or children. If a beneficiary is a dependant, then the taxable and non-taxable components, and the anti-detriment payment inherited in super nest egg are tax-free.
The anti-detriment payment was introduced to refund the contributions tax paid by deceased super fund members during their working lives. This was to avoid having the contributions tax regarded as a “death duty” on dependants.
The anti-detriment payment costs the federal budget around $100 million a year, and as such, is set to be dumped by the government as part of their tax reform package.