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Understanding death benefits under the new transfer balance cap

Posted on March 8, 2017 by admin

The introduction of a $1.6 million transfer balance cap for superannuation will take effect from 1 July 2017 which is likely to impact fund members who collectively with their spouse exceed $1.6 million in super.

When an individual with a super account dies, the trustee of the super fund will generally pay the deceased’s remaining super interests (accumulation and retirement phase) as a death benefit lump sum to a beneficiary.

Superannuation death benefits can be cashed:
– to a beneficiary or beneficiaries as superannuation lump sums that are paid out of the super system, or
– to a dependant beneficiary or beneficiaries as superannuation income streams that are retained in the super system, or
– to a dependant beneficiary or beneficiaries using a combination of the two.

A dependant is a person who is either a spouse of the deceased, a child of the deceased (less than 18 years old, financially dependent under 25 years old or has a disability) or a person who was in an interdependency relationship with the deceased.

When a death benefit income stream is paid to a dependant beneficiary, a credit arises in the beneficiaries transfer balance account. This may result in the dependant exceeding their transfer balance cap.

In this case, the beneficiary can choose to reduce their transfer balance account by commuting the death benefit income stream fully or partially. When this occurs, the commuted amount will need to be cashed out as a lump sum and paid to the individual – rather than being kept in an accumulation account, as this contravenes the regulatory requirement to cash the benefit out of the super system as soon as practicable.

Reversionary super income streams
A death benefit can be either reversionary or non-reversionary.

Reversionary death benefit income streams are super income streams that revert to a reversionary beneficiary automatically upon the member’s death. A non-reversionary death benefit income stream is a super income stream created and paid to the dependant beneficiary or beneficiaries.

If an individual receives a reversionary super income stream, the value of the entire supporting super interest at the time it becomes payable to the beneficiary counts towards their transfer balance cap.

If you are the recipient of a reversionary pension, the income stream will not count as a credit in your transfer balance account until 12 months after the death of the member, giving you time to adjust your affairs and reduce any amount that may cause you to exceed your transfer balance cap.

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Tips for incorporating career mentoring into your business

Posted on February 28, 2020 by admin

A career mentorship program involves partnerships between employees to develop professional skills and gain industry knowledge. Due to their requirement for a collaborative effort, career mentoring programs are often seen as powerful development tools for cultivating both leaders and employees within a business.

Whether you are a small business owner or a multinational corporate leader, the implementation of a mentorship program will always be profitable for businesses as not only does it create a harmonious workplace culture, it also helps to attract and retain employees.

As straight-forward as career mentoring sounds, there are a few key tips to keep in mind when building a mentorship program for your business:

Make sure your mentoring program is clearly defined:
To create a successful mentoring program, both mentors and mentees should have a concise understanding of their roles and what they would like to gain from the mentorship. By succinctly outlining the purpose of the mentoring program, mentors and mentees are more likely to keep organised and communicate respectfully with the guarantee of mutual rewards.

There should also be short-term and long-term goals established for all parties involved, including the business. These goals could be the narrowing of particular skill gaps or creating a more open workplace culture. By having these goals set in stone, both mentors and mentees and have a clear direction to work towards.

Personalise the match-making process:
Often times, businesses will match a mentor and mentee together depending on their skill-set and position within the company. While on paper, this may appear to be an efficient process, but the lack of chemistry between a mentor and mentee may prove to be devastating for the workplace environment.

As a result, be sure to involve both mentors and mentees in the match-making process and take into account personality traits. You could do this by asking employees to take a personality test to ensure compatibility in career goals, personal interests and preferred communication methods.

Be involved as a third-party:
Lastly, it is the responsibility of the business to check-in on the progress of mentorship programs in order to understand how mentors and mentees can grow together and what improvements can be made to the program. Remember to always refer back to the long-term goals established and consider the feedback provided by mentors and mentees from the program.

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