I’m due to inherit $300k in superannuation death benefits from my brother who passed away. I’m wanting to invest a portion of that into my superannuation fund. I’m a sole parent working full time. What are the tax implications on this, how much can I invest per year? Also, will this inheritance be classed as income for Family Tax Benefit/Centrelink reasons?

Hi Melanie,

Unless you are classified as a dependent of your brothers, you will be required to pay tax on the taxable component which is 15% or 30% plus medicare levy, depending on the exact type of taxable component (taxed or untaxed). If the money is proceeds of an insurance payment, then 30% will be payable on a portion of that money.

That payment won't be classed as income for centrelink, so there is no issues in that respect, but going forward, income (deemed income) and asset assessment will apply which may affect Centrelink payments.

If it is contributed to superannuation and you are under age pension age, then it is not assessed by Centrelink, so you would carry on with unchanged Centrelink payments. However, it is important to understand that it is then preserved and you won't be able to access until you reach your preservation age and/or meet a condition of release.

Also, be mindful that you have an annual non concessional contribution cap of $100k, however you are able to bring forward the next 2 years and contribute up to $300k in one go, but that then precludes you from making additional non concessional contributions.

But it may be worth your while contributing this money to superannuation overtime as concessional contributions which would give you some tax advantages (depending on your income). Whilst keeping the money outside super might reduce Centrelink payments, the reduced tax may make it worth while, but you would need to do the calculations etc and you might do say half of it now as a non concessional contribution and the other half as concessional contribution over the next 5-10 years or something like that.

Cheers

Glenn