What is the tax on death and TPD benefits?
Death and TPD cover is treated as a benefit through BUSS(Q) and so, for taxation purposes, any insurance benefits payable are treated as superannuation death or permanent disablement benefits. As such, death benefits paid to your financial dependants or spouse will be tax free to the extent that they are within your pension Reasonable Benefit Limit (RBL). Any part of the Death benefit amount that exceeds your pension RBL, will be taxed at the top marginal tax rate. If a Death benefit is paid to someone other than a financial dependant or spouse, the entire benefit (if under the RBL), will concessionally taxed as an Eligible Termination Payment. The tax payable on TPD benefits will vary due to a number of factors such as the age, length of service and the amount of the benefit. However the benefit is generally tax free. Please note: These statements in relation to taxation are based on interpretation of present Australian tax law, which may change at any time. Contact a professional tax
