The SMSF Association is making a submission to the Australian Taxation Office and Treasury about what it says is an ambiguous rule around death benefits.

In a session at the SMSF Association National Conference in Sydney, the association’s head of policy, Jordan George, said there had been confusion from members about a tax law change passed in July last year addressing how death benefits are treated, and whether they need to be moved out of super by the beneficiary after a trustee dies.

George said while the government’s intent may have been good, the rules need to be clarified or changed.

“We think the government’s policy intent is for death benefits to be cashed out of super,” George said. “One of the questions I then ask is, ‘Well, if you think that’s the government’s policy intent, why is the legislation unclear?’ ” he said.

George said there was not a huge amount of time to delve into the technical detail because the policy went through Parliament fairly quickly and, as a result, there is still confusion about the workings of the law.

He said the association had two options: to ask the ATO for clarity or to ask Treasury to change the law.

“At this stage, we think going to the ATO for further clarification may be a bit of a waste of time,” he said.

George said the approach to Treasury would be to show that there is uncertainty and ambiguity and it needs to be clarified.

Whether Treasury would provide that clarity or an amendment would depend on a number of factors, including how many people the rule affects and whether the amendment is technical in nature – which is relatively easy to enact – or a complete policy change.

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