What Is the Super Death Tax?

Australia does not have a general inheritance tax. However, tax may apply when a superannuation death benefit passes to someone who is not a tax dependant.

This commonly affects financially independent adult children. A spouse is generally treated as a tax dependant, but an adult child with their own career and finances usually is not.

The important question is not simply how much super you have. It is who will receive it and how your balance is divided between taxable and tax-free components.

Why Your Super Components Matter

Your super is broadly divided into taxable and tax-free components.

The taxable component generally includes employer contributions, salary sacrifice contributions, deductible personal contributions and investment earnings.

The tax-free component usually comes from personal contributions for which you did not claim a tax deduction.

The tax-free component remains tax-free when paid to a beneficiary. The taxable component can attract tax when paid to a financially independent adult child.

For example, a $100,000 taxable component paid directly to an adult child could attract $17,000 in tax. This includes the Medicare levy. Different treatment may apply when money passes through an estate.

An untaxed element may face a higher rate. This can sometimes arise with insurance held inside super or certain public sector arrangements.

Who Is Most Likely to Be Affected?

The main risk arises when super will eventually pass to adult children who support themselves financially.

The key questions are:

• Who is likely to receive your super?
• Are they a tax dependant?
• How much of your balance is taxable?
• Does your account contain an untaxed element?
• Is life insurance held inside your super?

This issue may not feel urgent while your spouse remains your intended beneficiary. However, your position can change after the first partner dies.

Four Ways to Reduce the Super Death Tax

1. Consider a Withdrawal and Recontribution Strategy

This involves withdrawing money from super and contributing it back as a non-concessional contribution. Non-concessional means no tax deduction is claimed.

The recontributed amount usually forms part of the tax-free component. This can improve the balance between your taxable and tax-free components.

You cannot choose to withdraw only taxable money. Withdrawals generally contain the same proportion of taxable and tax-free components as your account.

Contribution caps, age limits and total super balance rules also apply. Careful modelling is important before moving money.

2. Act While You Are Eligible

A recontribution strategy requires access to your super and eligibility to contribute money back. Your age, retirement status and previous contributions can all affect what is possible.

The non-concessional contribution rules may allow several years of contributions to be brought forward. However, using this option can restrict further contributions during the bring-forward period.

Eligibility can also reduce as your total super balance grows. Leaving the decision too late may close valuable planning options.

3. Plan How You Draw Down Super

Some retirees preserve every dollar inside super without considering the eventual tax position.

A planned drawdown may reduce the taxable amount remaining at death. Money withdrawn could be spent, gifted or invested elsewhere.

However, moving money outside super creates other considerations. Investment earnings may become personally taxable. The money may also affect Centrelink entitlements and form part of your estate.

The tax benefit should therefore be weighed against your income needs, estate plan and long-term security.

4. Review Your Beneficiary Nomination

Super does not automatically pass according to your will. The fund trustee usually follows the rules of the super fund and any valid beneficiary nomination.

A binding nomination can direct the trustee, provided it remains valid and meets the fund’s requirements. Some nominations expire and need regular renewal.

Check who you have nominated, whether the nomination is binding and when it expires. Life changes can leave outdated nominations pointing to a former partner or another unintended person.

Your solicitor and financial adviser should work together. Otherwise, a carefully prepared will and an outdated super nomination may produce conflicting outcomes.

Other Estate Planning Options

Super is only one part of a family’s legacy plan. Other structures may sometimes provide greater control over how money reaches loved ones.

Our article on investment bonds and long-term estate planning explains one alternative outside super.

You can also read how CommonCents approaches controlled gifting with investment bonds.

Each option has different tax, access, cost and estate consequences. No single strategy suits every family.

Practical Steps to Take Now

Arrange for your super strategy, will and enduring power of attorney to be reviewed together.

Request the taxable and tax-free breakdown of each super account.

Check whether any untaxed element applies.

Confirm who will receive your super.

Review every beneficiary nomination and expiry date.

Check where your life insurance is held.

The Bottom Line

Super death tax can create a significant and unexpected cost for adult children. Good planning may reduce this risk, but the available options depend on your age, balance, beneficiaries and personal circumstances.

The best starting point is a clear review of your super components and beneficiary arrangements. CommonCents can help model the available strategies and coordinate them with your wider estate plan.

If you would like to understand how these rules may affect your family, contact CommonCents Financial Planning for a practical conversation.

About The Author

This article was prepared with reference to a presentation by CommonCents advisers Nick Girle and James Ballin. Learn more about Nick and the team on the CommonCents About Us page.

Watch the Full Webinar

Prefer to watch rather than read? You can find this webinar and many other educational presentations on the CommonCents YouTube Channel.

General advice warning: The information contained in this article is general in nature and does not take into account your personal objectives,General advice warning: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Before acting on any information, consider obtaining personal financial advice and review our Financial Services Guide.

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The post How to Reduce the “Super Death Tax” and Leave More to Your Family appeared first on CommonCents Financial Planning.

Buying an investment property.

But increasingly, investors are exploring another option that receives far less attention: borrowing to invest in shares.

While this strategy isn’t suitable for everyone, it may provide a compelling alternative for investors seeking long-term growth, flexibility and diversification.

The key is understanding how it works, where the opportunities lie, and what risks need to be managed along the way.

The Concept Is Similar to Property Investing

At its core, borrowing to invest in shares works much the same way as property investing.

An investor contributes some of their own capital and borrows the remainder. The borrowed funds are then used to purchase growth assets.

In the early years, the costs of the investment may exceed the income received, creating a tax-deductible loss.

However, the objective is not to maximise losses.

The real aim is to own a larger pool of growth assets than would otherwise be possible and allow those assets to appreciate over time.

Just as property investors hope for long-term capital growth, investors who borrow to invest in shares are seeking growth from a diversified portfolio of companies.

Accessibility Is a Major Advantage

One of the strongest arguments in favour of investing in shares is accessibility.

Property often requires:

• A substantial deposit
• A large borrowing commitment
• Significant transaction costs
• A long-term commitment from day one

There is very little middle ground.

With shares, investors can often start much smaller and build their investment progressively.

This means investors can:

• Start with a modest investment
• Increase contributions over time
• Build confidence gradually
• Gain experience before committing larger amounts

For many families, this flexibility makes investing feel considerably less intimidating.

The Tax Position Can Be Attractive

Borrowing to invest in shares may also create meaningful tax advantages.

Many Australian share portfolios generate:

• Dividend income
• Franking credits
• Potential capital growth

These features can improve after-tax outcomes when compared with other investment structures.

In modelling completed during our recent webinar, borrowing to invest in shares produced larger early-year tax benefits than comparable property investments in certain scenarios.

Of course, tax considerations should never be the primary reason for making an investment.

Tax benefits should be viewed as a bonus, not the purpose of the strategy.

The focus should always remain on building long-term wealth through quality assets.

Understanding the Risks

Any strategy involving borrowed money deserves careful consideration.

The biggest risk is not necessarily shares themselves.

The biggest risk is leverage.

When you borrow money to invest, several factors become critically important:

• Interest rates
• Loan structures
• Cash flow management
• Investment discipline
• Risk management

Investors need confidence that they can maintain their loan commitments even during challenging periods.

Borrowing can magnify gains, but it can also magnify losses.

That’s why appropriate planning is essential.

Share Markets Are Volatile

Unlike property, share prices are updated every day.

Investors can see gains and losses immediately.

During major market downturns, portfolio values can fall sharply before eventually recovering.

This volatility can be uncomfortable.

However, long-term investors who remain focused on fundamentals rather than short-term market movements are often better positioned to benefit when markets recover.

Successful investing usually requires patience, discipline and a willingness to think beyond today’s headlines.

Understanding Margin Calls

One risk often discussed when borrowing to invest in shares is the possibility of a margin call.

A margin call occurs when portfolio values fall sufficiently to breach the lender’s required security levels.

When this happens, investors may need to:

• Contribute additional funds
• Provide extra security
• Reduce the loan balance

While this risk is real, it can often be managed through:

• Conservative borrowing levels
• Diversified portfolios
• Appropriate loan structures
• Professional advice and ongoing monitoring

Not all lending arrangements operate in the same way, which makes the choice of loan structure particularly important.

A Different Way to Think About Wealth Creation

For years, many Australians viewed investment property as the only serious way to build wealth using borrowed money.

Today’s environment is challenging that assumption.

A diversified share portfolio can offer several advantages, including:

• Lower transaction costs
• Greater liquidity
• Broad diversification
• Increased flexibility
• Potentially attractive tax outcomes

That doesn’t mean shares are better than property.

It simply means they deserve a place in the conversation.

The Bottom Line

The most successful investors rarely become attached to a single strategy.

Instead, they focus on one question:

“What gives me the best chance of reaching my goals?”

For some people, the answer will still be property.

For others, borrowing to invest in shares may provide a more flexible, diversified and efficient path toward long-term wealth creation.

The important thing is to understand the opportunities, recognise the risks, and build a strategy that aligns with your personal financial goals.

If you’d like to explore whether borrowing to invest is appropriate for your circumstances, the team at CommonCents Financial Planning can help you evaluate your options and develop a strategy tailored to your long-term objectives.

The post Why More Investors Are Looking at Borrowing to Invest in Shares appeared first on CommonCents Financial Planning.

True financial safety isn’t about avoiding uncomfortable market movements. It’s about protecting your lifestyle over decades.

Contact us to chat about how you can take a step toward comprehensive financial security that spans generations.

The post The Illusion of Safety — When “Low Risk” Investments Cost You the Most appeared first on CommonCents Financial Planning.

Inflation is quiet, predictable and relentless. Unlike market downturns, it doesn’t arrive suddenly — but over time, it does far more damage to purchasing power.

Contact us to chat about how you can take a step toward comprehensive financial security that spans generations.

The post Why Inflation Is the Quietest — and Most Dangerous — Risk to Your Wealth appeared first on CommonCents Financial Planning.

That’s why terms like “guaranteed returns” and “low risk” feel so appealing. But one of the biggest myths in personal finance is the idea that truly risk‑free investments exist.

Safety Is Not a Product

It’s a strategy.

A genuinely safe financial strategy:

• protects your long‑term purchasing power
• manages market volatility
• supports your goals
• grows your wealth appropriately

Avoiding risk entirely usually creates a different – and often more damaging – risk: the slow erosion of your financial security.

Contact us to chat about how you can take a step toward comprehensive financial security that spans generations.

The post Why “Safe” Investments Aren’t Always Safe appeared first on CommonCents Financial Planning.

But here’s the reality: you don’t need to be wealthy to start building wealth.

And believing that you do often causes people to delay taking action.

Why This Myth Persists

When we think of “wealth,” we tend to picture the finish line. We imagine the big super balance, the investment portfolio or the financial freedom that comes later in life. Because we only look at the destination, we assume it must take huge resources to get there.

But almost all wealth is built the same way: small, consistent habits repeated over long periods.

The Power of Starting Small

A clear illustration of this is compounding.

If an investor puts away $5,000 a year and earns around 7.5% annually—a rate consistent with long‑term balanced or growth portfolios—they can end up with more than $500,000 after 30 years. No inheritance. No windfall. Just disciplined, repeated saving.

An even more powerful example:

• Person A invests $5,000 a year from age 25 to 35, then stops.
• Person B invests the same $5,000 a year from age 35 to 65.

Even though Person B contributes three times the amount of money, Person A ends up with more thanks to starting earlier and letting compounding do its work.

“But I Didn’t Start Early…”

The good news is that it’s never too late. Whether you’re planning for retirement, wanting to help your children or saving for a major life change, the same principles apply:

• Start today
• Be consistent
• Give your money a purpose

Ten or fifteen years of steady saving and investing can still dramatically improve your financial position.

Why It’s Easier Than Ever

Today’s investment landscape is more accessible than ever:

• Lower minimum investment amounts
• Automated contributions
• Easy‑to‑use digital platforms

You no longer need $100,000 to get started.

For households with above‑average incomes, this accessibility is especially powerful because you can direct meaningful amounts into long‑term strategies without compromising lifestyle.

Simple Steps to Begin

1. Automate your savings.
Set up transfers that occur automatically each payday. If you don’t see it, you won’t spend it!

2. Use the 50/30/20 rule.
ASIC’s guideline is simple and effective:

• 50% needs
• 30% wants
• 20% saving or investing

3. Make wealth‑building “lazy-proof.”
Remove friction. Keep the process boring and consistent.

The Bottom Line

You don’t need a high income or a head start to build wealth. You need time, consistency, and a plan that matches your goals. Your starting point is far less important than what you choose to do next.

At CommonCents Financial Planning we excel at facilitating comfortable productive conversations through clear and genuine illustrations of why doing it is so important and the potential risks of not doing it.

Contact us to chat about how you can take a step toward comprehensive financial security that spans generations.

The post The Wealth‑Building Myth Holding Too Many Australians Back appeared first on CommonCents Financial Planning.

Over the next hour the scammer bombarded her with high pressure language and demands to act quickly to save her money. They had her drive to the local branch all whilst they remained on the phone demanding her to hurry. They demanded she withdraw $9,000 in cash and then return home where a courier was waiting to collect a package. The courier was unrelated to the crime and had responded to an online order to collect the package and deliver to another location.

Police had nothing to work with and the advice was to get a new computer, such was the speed and sleekness of the scam.

Tech support scams are one of the fastest-growing threats we see – someone rings claiming to be from Telstra, Microsoft, or NBN saying your computer has a virus and they need remote access “right now.”

Here are some ways you can be safer.

1. Legitimate companies almost never cold-call about computer problems

Telstra, Microsoft, and Apple do NOT ring unsolicited to tell you your computer is infected.

If you get such a call, hang up immediately.

We’ve had clients who let the caller remote in—within minutes malware is installed, banking details stolen, and sometimes ransomware locks everything.

2. Never grant remote access to an unsolicited caller

Even if they sound convincing and show you “proof” of errors, it’s fake.

Once they’re in, they can install keyloggers that record every password you type.

We had one client who caught it halfway and yanked the power cord. That’s the only thing that saved them.

The safest response is purely to say, “I’ll call you back on an official number” and then don’t.

3. Keep software updated and use proper antivirus

Enable automatic updates on your computer and phone, most patches fix security holes that scammers commonly exploit.

We also recommend installing reputable antivirus with real-time protection and regular scans.

Another great security option is to set your internet banking apps to require device approval for large transfers. This then adds an extra barrier even if someone gets temporary access.

Tech support scams rely on urgency and fear.

Slow down, hang up, and verify.

Assume the worst of every caller and rely on the defence that you will call them back on an official number.

It’s much better to do a quick check than get a total clean-out.

The post Halt Tech Support and Remote Access Scammers in their tracks appeared first on CommonCents Financial Planning.

Alternatives like funding insurance premiums or experiences can help adult children without overwhelming them.

Here are three ways we guide families toward meaningful, low-risk gifting.

1. Fund Insurance for Long-Term Protection
We often suggest paying for your children’s insurance premiums as a practical gift.

For $500–$1,000 annually, income protection and life insurance cover provides security against illness or loss.

One family we advised funded their children’s insurance policies which prevented significant financial strain when one of the children faced health issues. A bonus to this was that our clients were not relied upon to fund their sick child’s finances.

We help to review policies, ensuring adequate coverage like $5,000 monthly income replacement which protects both generations from unexpected burdens.

2. Gift Shared Experiences Like Holidays
We love recommending family holidays as non-monetary gifts, creating memories while aiding kids.

You can book a $10,000 Sunshine Coast getaway for two weeks, inviting children and grandkids to join.

This eases their budgets as often mortgages limit vacations all the while fostering bonds.

With the right budget, you can turn your gift into joyful, tax-free experiences that don’t risk misuse.

3. Opt for Smaller, Regular Gifts
We often advise smaller amounts for gifting, like $5,000–$10,000 yearly, to test impacts without Centrelink penalties.

For a $50,000 total over five years, this builds habits gradually—perhaps toward education or debt.

We help to model scenarios, ensuring gifts remain under thresholds to maintain your pension, and suggest tying to milestones like birthdays for ongoing support without disrupting work ethic.

Gift Wisely

Alternative gifting builds legacies thoughtfully and a good way to do this is to start with insurance reviews or holiday planning.

We’re here at CommonCents Financial Planning to tailor strategies and ensure your generosity lasts.

Reach out to discover ways to gift wisely for your family’s future!

The post Alternative Ways to Gift your Inheritance appeared first on CommonCents Financial Planning.

Self-managed super funds (SMSFs) currently manage around $1 trillion across Australia, but they’re not right option for everyone. We help you decide if an SMSF truly fits your goals by focusing on specific and practical use cases.

SMSF’s are used too often and in situations where it’s inappropriate but to show where they can add value, here are three scenarios where an SMSF might make sense.

1. Investing in Direct Property
If you’re a business owner leasing a warehouse or office, using an SMSF to purchase the property directly can make a lot of sense.

Let’s say your business buys a $1 million commercial space — your business pays rent to your super instead of to a third party thereby gaining you the control and all the potential growth.

We assess your balance (e.g., $500,000 in super), guide you on borrowing rules and help to ensure compliance. 

2. Pooling Balances for Bigger Opportunities
You may have found an opportunity to invest in a private scheme that is developing a specific block of land but the pricing is beyond the scope of your superannuation resources. 

In this case you and a group of others could each invest into a trust vehicle where the development would take place. The only way for you to invest your share using your superannuation savings would be via a SMSF.

Some families also do similar large scale investments by combining up to six related super balances into one SMSF.

There are specific rules to what a SMSF can invest in so there are some protections but this does not eliminate the extremely high risk of failure that a lack of diversification would bring to this option.

3. Borrowing or Speculative Strategies
Though we rarely recommend borrowing inside super, an SMSF allows it under strict rules—ideal if you’re set on leverage.

For speculative moves like Bitcoin (often capped at 5% of your fund), SMSFs offer flexibility unavailable in public options like a retail or industry super fund.

Borrowing and speculative strategies increase your risk greatly, especially when you use your retirement strategies to do it. When you take a high risk there is the expectation of a high reward but the risk of failure with borrowing and speculative strategies in super can mean that you’re left with nothing.

An SMSF can empower your super strategy, but only when it solves a specific need.

Start by reviewing your overall goals and then truly try to justify why you can’t or wouldn’t pursue just a standard retail or industry super fund.

At CommonCents Financial Planning, we’re here to help you live your richest life. 

The post How to know if you should Use a Self-Managed Super Fund appeared first on CommonCents Financial Planning.

Investment bonds help to offer control when gifting early to adult children or grandchildren, bypassing risks of misuse.

Here are three ways we leverage investment bonds to create secure and flexible legacies.

1. Provide Structure for Adult Children
We recommend investment bonds for gifting to adult kids when you want oversight.

For a $150,000 gift tied to a future date, we suggest an investment bond where you retain control as owner.

Funds then grow tax-paid at 30% and because you retain the control it means you can withdraw if needed if for example the financial situation of your adult child has deteriorated.

2. Skip Generations for Grandchildren
We use specialised investment bonds to bypass adult children and directly benefit grandkids.

An education bond, for instance, names grandchildren as beneficiaries, with parents managing investments but not withdrawing personally.

For $50,000 per grandchild, funds cover schooling—tuition or books—with great tax advantages when used for education. 

3. Ensure Estate Protection and Flexibility
We integrate investment bonds into legacy plans for non-estate assets, avoiding probate delays.

With a $100,000 investment bond you can nominate specific beneficiaries, transferring the benefits directly upon your passing which then sidesteps wills that could be at risk or get caught up in probate.

Investment bonds allow outstanding flexibility, lets you reclaim funds if circumstances shift and provides tax-efficient wealth creation for the beneficiary of your choice.

Investment bonds add control to early gifting and you can start by defining goals and consulting on tax rules.

At CommonCents Financial Planning, we’re here to help you build and protect your legacy.

Contact us to explore how investment bonds can secure your family’s future!

The post How CommonCents Uses Investment Bonds for Controlled Gifting appeared first on CommonCents Financial Planning.