Superannuation Death Benefits Anti-Detriment

What is an Anti-Detriment Benefit?

Basically this benefit payment refunds the total amount of contributions tax paid by the SMSF member during their lifetime.

Consider, Herb contributed to his super fund a total amount of $300,000. Tax rates on this contribution is 15% = $45,000 tax paid with a balance of $255,000 in the fund. Unfortunately, Herb dies, his beneficiaries can only receive $255,000 therefore a detriment of $45,000 existed.

Via the anti detriment law, a SMSF can pay the $45,000 (contribution tax) to Herb’s beneficiaries and claim a tax offset for $45,000. The anti detriment payment can be made to:

  • Current spouse (including same sex and defacto).
  • A former spouse
  • A child of any age.

It is at the option of the trustees to approve or dis approve the anti detriment payment. Reference should also go back to what the SMSFs trust deed says.

The real benefit of such a strategy may lie with the next generation. By including generation Y members in the fund, and anti detriment is triggered future carry forward tax losses may exist within the fund. This may mean generation Y and other young members of the fund may not pay contributions tax and accumulation tax for many years.

REMEMBER, the above are issues that auditors focus on when it comes to the audit of a SMSF. Our audits for funds start from $300 and follow a comprehensive audit plan.

DISCLAIMER: The above is general advice only, you should not act on this advice without consulting a professional adviser to discuss your personal circumstances.