Breaking down business industry codes

A business industry code (BIC) is a five-digit code you include on relevant tax returns and schedules that describes your main business activity. BICs come from the Australian and New Zealand Standard Industrial Classification (ANZSIC) codes and are added to by the Australian Tax Office (ATO) for tax return reporting purposes.

Employers must use the correct business industry code on their tax returns to ensure their return is lodged in the right category. Using the correct code for your business helps to reduce the risk of being incorrectly targeted for compliance activities, avoids processing delays and ensures employers receive services and information relevant to their business type.

The business industry code describes the main activity of the business. This can change over time if your business diversifies its products and services. The code is broken down into sections:

• ANZSIC system is first divided into 19 divisions, described by one letter (A to S).
• Divisions are broken down into subdivisions numbered with two digits. There are a total of 96 subdivisions.
• Subdivisions are broken down into groups. Each group is numbered with three digits, with the first two digits derived from the subdivision to which it belongs.
• Groups are broken down into classes. Each class is numbered with four digits, the first three digits derived from the group to which it belongs.
• The ATO adds a fifth digit to this system to provide further specifics.

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Tax on super death benefits for dependants vs non-dependants

July 9, 2020

A super death benefit is the super paid after a person’s death, usually to a nominated beneficiary. These benefits are subject to different tax treatments, depending on whether the beneficiaries are dependant or non-dependant.

Superannuation death benefits will generally be received tax-free by tax dependants, who are considered to be:

• A child of the deceased who is under 18 years of age,
• A spouse or former spouse of the deceased,
• A person who has an interdependency relationship with the deceased (e.g. if they live together or have a close personal relationship),
• A financial dependant of the deceased.

Dependants will not have to pay tax on the tax-free component of their super in the event that they:

• Withdraw it as a lump sum, or
• Receive an account based income stream.

However, they will be taxed at their marginal rate if they receive a capped benefit income stream and:

• The deceased was at least 60 years of age at the time of death
• The dependent is over 60 years of age and the total of their tax-free component and taxed element exceeds their defined benefit income cap.

Not all super death benefits are subject to tax; for non-dependants, there is a taxable portion. This component is largely made up of after-tax super contributions that the deceased member has made.

Super death benefit payments are subject to tax when:

• The payment is made as a result of the SMSF member passing away,
• The payment is provided to a non-dependent for tax purposes,
• The payment has a taxable component.

Non-dependants must calculate how much money in the super account is a:

• Tax-free component,
• Taxable component the super provider has paid tax on (taxed element),
• Taxable component the super provider has not paid tax on (untaxed element).

The amount of tax non-dependants pay will be based on their marginal tax rate, however, this amount may be reduced by tax offsets. For the taxed element of the taxable component, the effective tax rate is your marginal tax rate of 17% (whichever is lower). For the untaxed element of the taxable component, the effective tax rate is 32% or your marginal tax rate (whichever is lower).

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