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Super death benefits and adult children on youth allowance

March 2014

It's not a question many parents want to face, but if you have adult dependent children who receive Youth Allowance it's important to understand what happens to them as a taxpayer if they receive a death benefit from your super fund.

Let's assume some facts: your child is 18 years or older, in receipt of a Centrelink Youth Allowance, living at home and nominated to receive a benefit from their parent's superannuation fund in the event of the parent's death. 

From a tax perspective, the question is this: was this taxpayer on Youth Allowance at the time of their parent's death a dependent for the purpose of the super death benefits rule?

According to the ATO, if your child is living at home and receiving substantial financial support from the deceased parent a the time of death, then your child's status as a taxpayer is that they can receive a super lump sum death benefit tax-free.

The ATO's view is that an adult child can still be a dependant if they are receiving Youth Allowance from Centrelink. This is because the taxpayer is entitled to Youth Allowance (and not another entitlement like Newstart Allowance) which gives the taxpayer a lower allowance because they live at home with their parents. 

This means the client was receiving financial support from their parent at the time and is a super death benefits dependant.

As with any estate planning, being prepared in the unfortunate circumstance of your or your spouse's death can make the tax and financial matters easier to deal with.

If you don't have a will in place or you want to ensure your dependents are financially okay in the event of your death, speak to us on 9957 4033 about how to achieve the best structure and outcomes for your family. 

For more information about estate planning, please contact us on 02 9957 4033 or via our contact form

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Last updated March 2014. This article is provided for information purposes only and should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.


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Disclaimer

This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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