What tax would your children pay on your super?
Super left to a spouse is tax free. Super left to an independent adult child is not — and most people are surprised by how much is taken. Work out the bill below, and see what could be done about it.
Your super
Who would receive it
If you died today
What this does not tell you — and why it matters
Purpose: to estimate the tax on a super death benefit lump sum under current law, so you can see whether it is worth planning around. Its significant limitations, and their impact:
- It assumes today's law and today's balance. Impact: the real figure will differ, potentially by a lot. Your balance will change, and the rates are set by legislation that can change before you die.
- It is a lump sum calculation only. Impact: if a dependant takes an income stream instead, the tax works differently and this number does not apply.
- It assumes your fund pays the benefit the way you have selected. Impact: if your nomination is invalid, lapsed or non-binding, the trustee may pay someone else entirely, and the tax changes with them. This is the single most common failure in practice.
- It does not check whether a recontribution is actually available to you. Impact: the saving shown may be unreachable. It depends on your age, your work status, your total super balance, the contribution caps, and having the cash outside super in the meantime.
- It ignores the tax on any capital gains realised inside the fund when assets are sold to pay the benefit, and any fund fees. Impact: the amount actually received will be lower than shown.
- It assumes everyone involved is an Australian tax resident. Impact: a non-resident beneficiary is generally exempt from the Medicare levy and may be taxed differently under a tax treaty.
- An estate is not automatically better. Impact: money paid through your estate can be exposed to challenges against your will and to creditors, which a direct payment generally is not. The tax saving is not the only thing that matters.
Direct from the fund, or through your estate?
| Paid direct to the person | Paid via your estate |
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What a recontribution strategy could save
A recontribution strategy means withdrawing part of your super and putting it straight back in as an after-tax (non-concessional) contribution. The money comes back as tax-free component, so less of it is taxable when your children inherit it. Drag the slider to see the effect.
The assumptions used, and why they are reasonable
Tax rates (set by legislation — not editable)
These are statutory rates. They are fixed here because they are fixed in law, and a calculator that let you change them would give you an answer the Tax Office would not.
- Lump sum death benefit to a tax dependant: nil tax on both the taxed and untaxed elements, at any age.
- To a non-dependant, paid direct: 17% on the taxed element and 32% on the untaxed element. Both include the 2% Medicare levy.
- To a non-dependant via the estate: 15% and 30% respectively. The Medicare levy does not apply to a deceased estate.
- The tax-free component is never taxed.
Source: ATO Schedule 12 — Tax table for superannuation lump sums, Table A (published 17 June 2026, applies to payments from 1 July 2026); and ATO Paying superannuation death benefits (last updated 6 November 2025) for the estate rates. Both checked against the ATO on 5 August 2026.
Why the default 20% tax-free component is reasonable
Where you don't know your own split, the tool starts at 20%. Most people's super is built mainly from employer contributions and salary sacrifice, which are taxable component; the tax-free part comes from personal after-tax contributions, which most people make less of. A fifth is a middle-of-the-road starting point, not a prediction — your actual percentage is printed on your annual statement, and you should use it. Every other assumption on this page can be changed by you.
Why the untaxed element defaults to zero
An untaxed element is uncommon. It arises mainly in some older public-sector schemes, and where a fund has claimed a tax deduction for insurance premiums. For most people in an ordinary APRA-regulated fund or an SMSF the correct figure is zero, so zero is the reasonable default.
Contribution caps used in the recontribution section
Non-concessional contributions cap for 2026–27: $130,000; up to $390,000 under the three-year bring-forward rule where your total super balance was under $1.84 million at 30 June 2026. Source: ATO Contributions caps, verified 5 August 2026. Whether you can actually use these depends on your age, your total super balance and your work status.
What is deliberately not modelled
No investment return, inflation or wage growth is applied, because this tool calculates tax on an amount payable now, on death — it makes no projection into the future. There is therefore no present-value figure to state.
Why super to your children is taxed at all
Superannuation gets concessional tax treatment while it is helping fund your retirement. When it passes to someone who was not depending on you, the law treats the concession as having done its job, and claws part of it back. That is the whole logic of the death benefits tax.
The trap: "dependant" means two different things
This catches almost everybody. Under superannuation law, your child of any age is a dependant, so your fund is allowed to pay them directly. Under tax law, a child is only a dependant if they are under 18 or were financially dependent on you. An independent 45-year-old is a dependant for one purpose and not the other.
The practical result: your fund can pay your adult children without any trouble, and the tax is deducted on the way out. Nothing goes wrong procedurally. It is simply that a share of the money never arrives.
For tax purposes, a death benefits dependant is your spouse or de facto, a former spouse or de facto, a child under 18, a person in an interdependency relationship with you, or anyone else who was financially dependent on you.
What people actually do about it
- Recontribution. Withdraw and put back as an after-tax contribution, converting taxable component into tax-free component. Needs a condition of release, available cap space, and you generally need to be under 75.
- Withdrawing before death. Once you are over 60 and retired, lump sums out of super are generally tax free to you. Money you have already taken out is not a super death benefit at all. The obvious difficulty is knowing when.
- Leaving it to a spouse first. Tax free on the first death, but it usually just moves the same problem to the second death.
- Directing it through the estate. Saves the 2% Medicare levy, but exposes the money to challenges against your will and to creditors.
- Checking your nomination is valid. Costs nothing and is the one most often left undone. A lapsed binding nomination puts the decision back in the trustee's hands.
Is this worth doing anything about?
It depends on the size of the number above and how much flexibility you have. For some people it is a rounding error against the rest of the estate. For others it is the largest single tax their family will ever pay. The point of the calculator is to tell you which of those you are, before it is someone else's problem to solve.
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