" Not all super death benefits paid to a non-tax dependant are subject to tax
Only the ‘taxable’ portion of a super death benefit is subject to tax, where a person receives it who is not a dependant for income tax purposes. Any ‘tax-free’ component is exactly that, tax free in the hands of the beneficiary. The ‘tax-free’ component is basically made up of after-tax contributions that the member has made to superannuation. Consequently, a common strategy to ‘wash’ taxable components to tax free, prior to a member dying, is the re-contribution strategy."
