Definition

Super paid after a person's death is called a 'super death benefit'.



How it is paid: 

If you're a dependant of the deceased, the death benefit can be paid as either a lump sum or income stream

If you're not a dependant of the deceased, the death benefit must be paid as a lump sum.




How tax applies

The tax on a death benefit depends on:

  • whether you were a dependant of the deceased under taxation law
  • whether it is paid as a lump sum or income stream
  • whether the super is tax-free or taxable and whether the fund already paid tax on the taxable component
  • your age and the age of the deceased person when they died (for income streams).


If you are a dependant of the deceased

  • tax-free component 

--> you don't need to pay tax on this

  • taxable component the fund has paid tax on (taxed element) 
  • taxable component the fund has not paid tax on (untaxed element).


If you got the death benefit through a deceased estate

If you receive a death benefit through a person's estate, you don't need to include the death benefit in your assessable income. The estate will have paid tax on your behalf.


If you got the death benefit directly from a fund

The fund will send you a payment summary which shows:

  • how much of the death benefit is taxable and how much is tax-free
  • how much tax they withheld on your behalf
  • any Australian super income stream tax offsets you're able to claim.


When you fill out your tax return you don't need to include as income:

  • the tax-free component of your super payment
  • any taxable component you get in a lump sum. 

    --> you don't need to pay tax on this. Don't include it on your tax return as income.


You need to include the taxable component you get through an income stream as assessable income on your tax return, if both you and the deceased were under 60 years old or the taxable component contains an untaxed element. Claim tax offsets in the offset section of your tax return



If you are not a dependant of the deceased


  • tax-free component

--> you don't need to pay tax on this.

  • taxable component the fund has paid tax on (taxed element)
  • taxable component the fund has not paid tax on (untaxed element).


Taxable component received as a lump sum

--> the taxable component of the payment will be taxed at your marginal tax rate.

Type of super
Effective tax rate (including Medicare levy)
The effective tax rate you will pay is described in this table
Taxable component – taxed element
Your marginal tax rate or 17%, whichever is lower
Taxable component – untaxed element
Your marginal tax rate or 32%, whichever is lower


Taxable super received as an income stream

From 1 July 2007, a non-dependant can't take the death benefit as an income stream under superannuation law.


For non-dependants who had an income stream first paid to them before 1 July 2007, your payment will be treated in the same way as a payment to a dependant.


Taxed elementsuper fund may have paid tax on the taxable super at the rate of 15%
Untaxed elementsuper fund has not paid tax on some of the taxable super in your account,
Tax-free elementpersonal contributions you made from your after-tax income, unless you claimed a tax deduction for them. E.g.Non-concessional (after-tax) contributions


https://www.ato.gov.au/Individuals/Super/In-detail/Withdrawing-and-paying-tax/Withdrawing-your-super-and-paying-tax/?page=7#Super_death_benefits