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How death benefits are paid

Lump sum payments

Death benefits will be tax-free if paid to a tax dependant. The beneficiary must be considered a dependant at the time of death in order to qualify for the dependant tax treatment.

If the lump-sum is paid to a non-tax dependant, the taxable component of the benefit will be taxed at 15% (plus Medicare levy). If the death benefit contains an insurance component with an untaxed element, the untaxed amount will be taxed an additional 15%.

Income stream payments

The Trustee has the discretion to pay superannuation death benefits as an income stream to your current spouse or eligible dependants. Dependent children under age 25 - can receive superannuation death benefits as an income stream until they reach age 25.

Any balance when the child reaches age 25 will be paid as a lump sum, tax-free, unless the child is permanently disabled, in which case, the income stream can continue. (Please note - currently Telstra Super does not pay income streams to children under 18 years.)

Tax on the income payments varies according to the age of the dependant and the age the deceased died.

Age of deceased Age of recipient Taxation
Age 60 and above Any age Taxable component
  • element taxed in fund is paid tax-free
  • element untaxed in fund is subject to marginal tax rates with a 10% tax offset applied.
Below age 60 Above age 60 Taxable component
  • element taxed in fund is paid tax-free
  • element untaxed in fund is subject to marginal tax rates with a 10% tax offset applied.
Below age 60 Taxable component
  • element taxed in fund is subject to marginal tax rates with a 15% tax offset applied
  • element untaxed in fund is subject to marginal tax rates.

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