From 1 July 2017 Anti-Detriment Payments Are No Longer Viable

“Australia’s Death-Tax by Stealth” – can it be managed? Investment Bonds can provide the answer.

Superannuation Changes – Anti-Detriment

The removal of anti-detriment payments, announced in the Federal Budget and effective from 1 July 2017, will have a profound effect on non-dependant beneficiaries receiving death benefit payments from un-taxed elements of superannuation funds. This is now commonly known as “Australia’s Death-Tax by Stealth”.

Prior to 1 July 2017, where trustees allow it, it is possible to re-claim the ‘lump-sum’ tax of 17% paid on these funds by claiming anti-detriment payments. This will not be possible after 1 July 2017. An alternative strategy is the use of an Investment Bond facility to make a ‘Binding Nomination’. This can be implemented if the superannuation fund member is approaching the end of his or her life (perhaps due to illness)with a life expectancy of say, 3 to 5 years. The member withdraws his or her super, including the ‘untaxed’ element, and invests into an Investment Bond. He or she then makes Binding Nominations to their ‘non-dependant’ beneficiaries (they do not have to be family) with the intention that upon passing, all benefits are paid to the recipient ‘tax-free’. Whilst there is less tax being paid in the superannuation fund than within the Investment Bond, provided the member does not live beyond expectations, the amount of tax-paid within the Bond should not exceed the ‘lump-sum’ tax they would otherwise have to pay if received as a superannuation death benefit.

Below is a ‘live-case’ study from an actual investor using an Austock Life Investment Bond.


  • Richard is 82 and in failing health.
  • He has $500,000 in an Account Based Pension with a taxable component of $250,000.
  • He has no dependants.
  • Funds will go to non-dependants on his death.
  • Based on the current components, Death Benefit tax of $42,500 will apply.

Strategy – Establish an Insurance Bond in Richard’s name

  • Redeem super - tax free as over 60. Make binding nominations.
  • On Richard’s death, the Bond matures and is paid tax-free to beneficiaries regardless of the Bond year.
  • Tax paid within Bond. Approx. 5 year breakeven point* when compared with funds remaining in super + death tax.

* Based on $500,000 Investment Bond investment in the Conservative Fund assuming gross annual return of 5.84% and internal portfolio tax rate of 27.5%.


  • Save $42,500 in tax.
  • Non-contestable.
  • Nominated beneficiaries can be anyone.

This article contains factual information and is not intended to constitute financial product advice or imply any recommendation or opinion about Imputation Bonds (IBs). Austock Life Limited AFSL 225408 ABN 68 092 843 902 is the issuer of IBs. In deciding to acquire or to hold an IB you should obtain the relevant Product Disclosure Statement and consider its content. We recommend that before investing you seek professional advice from a licensed financial adviser.