Item 13 - Superannuation lump sums and employment termination payments

Death benefit employment termination payments and superannuation lump sums paid to trustees of deceased estates are reported at this item. Use the PAYG payment summary - superannuation lump sum or PAYG payment summary - employment termination payment provided by the payer to complete the worksheets for Superannuation lump sum schedule (plt) and Employment Termination Payments Death Benefits worksheet (pyt).

Superannuation death benefits paid to a trustee of a deceased estate

A superannuation death benefit paid to a trustee is taxed in the hands of the trustee in the same way that it would be taxed if paid directly to a beneficiary. That is the portions of the payment are subject to tax to the extent the beneficiary is a dependant or a non-dependant of the deceased. There is no tax payable to the extent that the payment is made to a dependant or eligible non-dependant of the deceased.

Eligible non-dependants of deceased members of the Australian Defence force and Australian Police Force (including Australian Protective Services) who have died in the line of duty are to be treated as dependants for tax purposes.

The superannuation fund should have provided you with a PAYG payment summary - superannuation lump sum which shows the components of the payment.

The tax-free component of a superannuation death benefit received by a trustee is not subject to tax, regardless of whether the beneficiary is a dependant or non-dependant.

To the extent that a non-dependant is the beneficiary of the estate, the taxable component of the payment is assessable income. Show the taxed element at label V item 13 and the untaxed element at label W item 13.

If you have more than one payment summary, add the taxable component elements together and show the total of the taxed elements at label V item 13 and the total of the untaxed element at label W item 13.

Death Benefit employment termination payments (ETP)

An ETP paid to a trustee is taxed in the hands of the trustee in the same way that it would be taxed if paid directly to a beneficiary. That is the portions of the payment are subject to tax to the extent the beneficiary is a dependant or a non-dependant of the deceased.

The employer should have provided a PAYG Payment Summary - employment termination payment which shows the components of the payment.

The tax-free component of an ETP received by a trustee is not subject to tax, regardless of whether the beneficiary is a dependant or a non-dependant.

Eligible non-dependants of Australian Defence Force and Australian Police Force (including Australian Protective Services) members who have died in the line of duty are treated as dependants for tax purposes.

To the extent that a non-dependant is the beneficiary of the estate, the taxable component of the payment is assessable income and should be shown at label Y item 13.

To the extent that the beneficiary of the estate is a dependant, taxable component amounts up to the ETP cap (for example $195,000 for 2017-18) are not subject to tax and are not shown in the return. Amounts above the ETP cap are assessable income and should be shown at label X item 13.

If you have more than one payment summary from the same employer, add the components that are assessable income together and show the total of the taxable component for a dependant of the deceased at label X item 13 and the total of the taxable component to a non-dependant of the deceased at label Y item 13.

Definition of Terms

Dependant

A person is a dependant of the deceased if, at the time of death or the time the payment was made, the person was:

the surviving spouse (including a de facto spouse)
a former spouse (including a former de facto spouse)
a child of the deceased who was under 18 years old
financially dependent on the deceased person just before he or she died, or
in an interdependency relationship with the deceased.

A person who is not a dependant of the deceased, may be referred to as a non-dependant.

Eligible Non-dependant

A person is an eligible non-dependant if they are a non-dependant of a deceased member of the Australian Defence Force or of an Australian police force (including Australian Protective Services) who died in the line of duty.

Interdependency relationship

An interdependency relationship exists where there is a close personal relationship between two persons who live together, and one or both provide for the financial, domestic and personal support of the other. An interdependency relationship can also exist where there is a close personal relationship but the other conditions are not satisfied, because of the physical intellectual or psychiatric disability of one of the persons.

Spouse: in relation to a person, includes:

another person (whether of the same sex or a different sex) with whom the individual is in a relationship that is registered under a prescribed State law or Territory law, and
Another individual whether of the same sex or a different sex, although not legally married to the individual, lives with the individual on a genuine domestic basis in a relationship as a couple.

Child: in relation to a person, includes:

an adopted child, stepchild or an ex-nuptial child of the person
a child of the person's spouse* (as defined above) and
someone who is a child of the person within the meaning of the Family Law Act 1975 (for example, a child who is considered to be a child of a person under a state or territory court order giving effect to a surrogacy agreement.