I have heard that my super beneficiary is my legal personal representative (in my will, which is my two older children) who will be charged a “death tax” of 32% because they are over 18 and not financially dependent on me.
Is it true that if I transfer money from super to my bank account before I die, there will be no “death tax”?
Regarding the first part of your questions, the death benefit tax on the taxable component of your super is 15% plus Medicare, which for most people is not the full balance. Therefore, the effective rate of tax paid is usually lower. It doesn’t matter whether the super goes directly to your children, or through a will.
You are correct in pointing out that this death benefits tax can be avoided by withdrawing your super savings before death. The challenge here is timing. You don’t want to withdraw too early and then have your savings sitting in the bank earning negligible returns, and potentially subject to income tax.
You should discuss your arrangements with your solicitor.
I am confused about the ATO’s six year rule regarding Capital Gains Tax (CGT). I bought a unit in April 2021 which was my home. I moved out in January 2025, and the unit has been rented ever since. Will there be any CGT?
Thanks for your question, this rule can be confusing. In Australia, our home is exempt from capital gains tax. The six-year rule exists to allow for situations where a person leaves their home temporarily, for example for interstate or overseas work, but then plans to return in the future.
Note, no return is required. Although the property can be rented out during their absence, the capital gains tax main residence exemption continues for 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 one location.
So the answer to your question depends on what happened when you moved out in 2025. Did you buy a second home? If so, it is now your principal residence and the unit will be subject to capital gains tax. However, if you’ve been renting since then, the six-year rule may actually apply.
As this is a tax matter, you should confirm your situation with your accountant.
I am 37 years old and looking to buy property in Sydney using an inheritance from Ireland. Will I pay tax on it in Australia? After clearing some debts, I’ll be left with about $130,000 – should I put some into super or use it all as a property deposit (with a mortgage of $750,000–$900,000)?
There is no inheritance tax in Australia, so you’re pretty much in the clear on that front.
My inclination would be to use all funds to help purchase a home. Having more available here can eliminate the need for lenders insurance (which you have to bear), and improve the interest rates you can access.
Historically residential property values have increased over time, so assuming this continues, you are improving your ability to acquire an asset that is appreciating in value, and exempt from capital gains tax.
Later in life, if you haven’t accumulated enough super to meet your needs, equity in your home can be accessed either by downsizing, or through a reverse mortgage.
Paul Benson is a Certified Financial Planner at Guidance Financial Services. He hosts. Financial independence Podcast enquiries: paul@financialautonomy.com.au
- The advice given in this article is general in nature and is not intended to influence the reader’s decisions about investments or financial products. They should always seek 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 Independence podcast.
