What will happen to my investment losses once I die?

1 month ago 12

Opinion

January 14, 2026 — 5.01am

You have written that death does not trigger capital gains tax. It passes the liability to the beneficiary who will pay CGT if and when they dispose of the asset. My question is about capital losses. Is it true that they die with death? And what is the position if a self-managed super fund has capital losses and somebody dies?

Capital losses do have a limited “life”. Capital losses may be offset against capital gains in your final personal tax return for the financial year up to the date of death, but they are not available to your estate or beneficiaries to offset against any future capital gains.

In most cases, capital losses do not persist once you pass away.

As far as self-managed super funds go, superannuation expert Meg Heffron says capital losses are treated in the usual way. They are first offset against capital gains, and if losses exceed gains they are carried forward.

They are only lost if the fund is wound up; otherwise, they remain available to offset gains of other members. This is very different from a public fund, where capital losses are member-specific and effectively lost once the deceased member’s benefit is paid out.

Death benefits are treated like any other benefit for capital gains purposes. If assets have to be sold to pay the death benefit, capital gains or losses are triggered in the normal way and form part of the fund’s overall tax position.

If the fund is paying pensions, some gains may be tax-free or even completely disregarded. She also notes there can be interesting planning opportunities in ensuring the fund is not 100 per cent in pension phase when a capital loss is realised.

I received a BT Customer Identification Procedure Form requesting certified ID, source of funds, and source of wealth by January 30. Why is BT requiring this for my existing retail fund investments? Is this government overreach or “Big Brother”?

No, this isn’t Big Brother surveillance. BT, part of the Westpac Group, is simply complying with Australia’s long-standing anti-money laundering laws, which have been in place since 2006 and are overseen by AUSTRAC. Every bank, super fund and investment platform in the country operates under the same rules.

Those rules require financial institutions to know who their customers are and, where necessary, understand the source of their money. It’s not about prying – it’s about preventing money laundering, fraud and terrorism financing.

Over time, records go out of date, so providers periodically have to refresh customer details. That process is known as ongoing customer due diligence, and it’s routine across the industry.

Westpac, along with all of Australia’s major financial institutions, has to comply with strict Know Your Customer laws.

The timing reflects upcoming change. Significant reforms to the AML/CTF regime (anti-money laundering/counter-terrorism financing) take effect from March 31, 2026, updating and tightening the existing risk-based system. Providers are sensibly preparing in advance.

If you want to keep full access to your account, you’ll almost certainly need to complete the form. Failing to do so can result in restrictions, simply because the law gives institutions little choice. If you have concerns, the practical step is to contact BT and talk through what’s required.

I recently made a $30,000 personal contribution to my Hostplus super account intending to claim a tax deduction for the 2025–26 year. I’m retired and turned 68 this year. According to your book, I need to meet the work test to be eligible for the deduction. I can’t find on the ATO website what happens if I do not meet the work test. Are there penalties if I don’t meet the requirement, or do I simply miss out on the tax deduction? What should I do?

The work test allows people aged 67 to 75 to claim a tax deduction for personal (concessional) super contributions. To qualify, you must do at least 40 hours of paid work within a period of 30 consecutive days in the financial year in which you intend to claim the deduction.

If you don’t meet the work test, there are no penalties. You simply lose the right to claim the tax deduction. The contribution itself is still valid – it just becomes a non-concessional contribution.

The practical solution is to meet the work test before 30 June. Many people do this through casual or short-term work – taxi driving, delivery work or similar. For a resourceful 68-year-old, finding 40 hours of paid work is usually quite achievable.

My wife and I have an SMSF in pension phase. As we are both over 75, we can no longer recontribute the compulsory pension payments into the fund. We don’t need this money outside the SMSF, as we have sufficient rental income.

Is there any way we can recontribute the funds, or is there another approach? We have two daughters, aged 48 and 46, who could become members of the SMSF. Could we transfer the money into their names, and would that be a sensible strategy?

It’s possible for them to become members of your SMSF, but you need to think carefully about the implications. Your daughters may have very different views about investment strategy, risk and asset allocation. There’s also the possibility they may want access to the money sooner rather than leaving it locked away in super.

In most cases, a simpler and cleaner approach is to give them the money personally and let them decide what to do with it. If they’re employed, they may be able to contribute it to their own super and even claim a tax deduction through concessional contributions.

I assume they already have their own super funds. Keeping their super separate from your SMSF gives them full control, avoids complexity and makes life much easier when the time eventually comes for you, as parents, to pass on.

Noel Whittaker is author of Retirement Made Simple and other books on personal finance. Questions to: [email protected]

Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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