Personal details
 
 
 
First name*
 
 
 
Last name*
 
 
 
Member number (if known)
 
 
 
Email*
 
 
 
 
 
Question 1
 
1. The Blue Sky SMSF has two members, Alice and Ben. The fund holds a life insurance policy for Alice, with premiums being deducted from her accumulation account. Alice sadly passes away, and the insurer pays the policy proceeds to the SMSF.

To which account should the insurance proceeds be allocated?*
 
A) Ben’s accumulation account
B) Alice’s pension account
C) Alice’s accumulation account
D) The fund’s reserve account
 
 
 
 
 
 
Question 2
 
2. Ben, a member of the Blue Sky SMSF, becomes permanently incapacitated. The fund receives TPD insurance proceeds. Premiums for Ben’s insurance cover were being deducted from his pension interest.
Where should the insurance proceeds be allocated?*
 
A) Ben’s accumulation interest
B) Ben’s pension interest
C) Alice’s accumulation interest
D) Either Ben’s accumulation or pension interest
 
 
 
 
 
 
Question 3
 
3. When an SMSF receives insurance proceeds from a life or TPD policy, how are the proceeds from these events treated for tax purposes within the fund?*
 
A) They are taxed as fund earnings at 15%
B) They are capital proceeds but disregarded for CGT purposes
C) It depends on whether the benefit is paid as a death or permanent incapacity
D) They will be treated the same was as any other contribution to the fund
 
 
 
 
 
 
Question 4
 
4. How are temporary incapacity (income protection) benefit payments taxed in the hands of the member when paid from an SMSF?*
 
A) They will be tax-free if the member is aged 60 or older
B) They are taxed at a 15% flat rate
C) They are treated as assessable income and taxed at the member’s marginal tax rate
D) They are treated as assessable income and taxed at the member’s marginal tax rate, less a 15% tax offset
 
 
 
 
 
 
Question 5
 
5. David, a member of the Sunrise SMSF, had a non-reversionary account-based pension account, with a 100% tax-free proportion. The fund receives life insurance proceeds after David’s death, and the benefit is paid to his estate as a lump sum.

How are the insurance proceeds treated when calculating the tax components of the lump sum benefit paid to the estate?*
 
A) The proceeds will be added to the tax-free component
B) They are split equally between tax-free and taxable components
C) They are added to the taxable component
D) They are not included in the benefit calculation
 
 
 
 
 
 
Question 6
 
6. Clara is a member of the Green Leaf SMSF. Her pension account has a 70% tax-free proportion. The fund holds a life insurance policy for Clara, with premiums deducted from her pension account. Upon her death, the pension automatically reverts to her spouse.

How will the insurance proceeds affect the tax-free proportion of the reversionary pension?*
 
A) The tax-free proportion will decrease
B) The tax-free proportion will increase
C) The tax-free proportion will remain unchanged
D) The insurance proceeds will be taxed at 15%
 
 
 
 
 
 
Question 7
 
7. Meredith, aged 60, was a member of the Dairy Farm SMSF. Upon her death, the fund received $500,000 in insurance proceeds. Her total superannuation benefit (including insurance proceeds) was 100% taxable component. A lump sum death benefit was paid to her adult son Jacob, who is not a tax dependant.

Which of the following is TRUE in relation to the tax components of the death benefit?*
 
A) The insurance proceeds will be taxable component (untaxed element)
B) As Meredith was aged 60 or older the death benefit is entirely tax-free regardless of components
C) As Meredith was aged 60 or older the death benefit is entirely taxable component (taxed element)
D) A proportion of the total death benefit will be taxable component (untaxed element)
 
 
 
 
 
 
Question 8
 
8. The trustees of the Oak SMSF are considering whether to claim a tax deduction for the cost of insurance premiums or for the future liability to pay benefits after paying a death benefit to a member’s beneficiary.

Which of the following is TRUE if the trustees elect to claim a deduction for the future liability to pay benefits?*
 
A) The fund trustees can claim both deductions in the year of death
B) The choice is irrevocable and future insurance premiums will no longer be deductible
C) The deduction is only available if the member is over 65
D) The deduction is not available if the fund is in pension phase
 
 
 
 
 
 
Question 9
 
9. For a payment to be treated as a disability superannuation benefit, which of the following is required?*
 
A) The member must be under age 60
C) The benefit must not be paid as a pension
B) Two legally qualified medical practitioners’ certification
D) At least one medical practitioner’s certification
 
 
 
 
 
 
Question 10
 
10. Which of the following statements is correct?*
 
A) A payment made under a terminal medical condition can be rolled over to another fund to commence an income stream
B) A tax-free component uplift is applied to a member’s entire balance when they become permanently incapacitated
C) Proceeds from a TPD insurance policy, paid under permanent incapacity, will be tax-free when received by the member
D) The taxable component of a lump sum death benefit paid directly to a non-tax dependant beneficiary will be added to their assessable income for tax purposes