The Government's new superannuation rules will introduce a "death tax" on parents who own property through self-managed superannuation funds, according to a finance specialist.
Part of the new rules, which take effect from July 1, govern the inheritance of property owned by parents' superannuation funds, by non-dependent children.
On taking possession of the property, children face the immediate tax liability of up to 16.5 per cent of the property's value, which has been labelled a trap by William Buck chartered accountants director Anna Carrabs.
"The introduction of this tax is effectively as a death duty by stealth, as a great proportion of the $21 billion worth of self-managed superannuation funds now own or part-own property," Carrabs said.
"When the superannuant's death occurs, the person who inherits the property is immediately liable for the tax. This is the first time a tax liability has passed to the next generation or others on property inheritance and people should be working now to make arrangements to deal with this potential financial time bomb."
Finance professionals must be aware that if property is held and not put in a SMSF there would be no inheritance tax implications.
"We shouldn't just assume that everything should go into super. You should do your numbers first. Adviser and accountants really need to know if there is a going to be a tax at the end when the property is passed to the children so it can be mitigated using the structure of the fund," Carrabs said.
