He said under the proposed changes, when a member dies everything dies with the member except for the credit to the spouse in the future.

“The whole concept of carrying forward losses is based exclusively on the individual. Now, there’s an additional sort of important point there and it’s all linked to this concept of Death Benefits.”

“If you die during the year and your benefit is not paid out and your member balance is still sitting in your interest at the end of the year, and your total super balance is over that $3 million at the end of the year before the benefit is paid, then there will be no assessment based on that year of death.

“So basically, any liability for this tax will die with your death. However, again, subject to the conversation that we have with Treasury, if you die on the first of July, and your balance is taken at the 30th of June, you’re still alive and there would be a tax liability calculated for that year, which would then be subject to being paid out via the by the estate.

“There’s little quirky elements that really haven’t been addressed properly through the consultation process and hopefully will be addressed by the final legislative piece that we see because there’s certainly some inequity particularly around death.”

Mr Miller said that particular “quirk” leads to the broader conversation around insurance proceeds and the concept of debits and credits.

“We’re almost talking transfer balance cap from a conceptual point of view, but what we’re talking now is debits and credits in the sense of withdrawals and contributions,” he said. “Things like a reversionary pension will be considered a contribution to the spouse and so in the first year, they will subtract the value of the reversionary pension from their TSB and they effectively get a one-year grace in regards to the $3 million cap.

“But the following year, it’s going to be counted and it just creates this inequity in the sense from a TSB point of view.”

He said in regard to contributions, a pension will count and is allocated from a TBC in 12-months’ time but from a tax concession point of view, it could more than 12 months.

“There are different rules for different measures and that can create issues.

“Similarly, for insurance proceeds, they will be treated like a contribution so there will be a negative or a subtraction of the insurance proceeds in the first year.

“However, that leads to this conundrum in the sense that a TPD payout, for example, will be a negative amount in year one, but then it will count towards a member’s total superannuation balance versus personal injury and structured settlement contributions where they don’t count towards a member’s total superannuation balance.

“They are ultimately excluded from this concept and this creates a huge inequity that a person under the same injury or illness condition subjected to the source of the proceeds will either be included in this measure or excluded from the measure.”

He said that produces an unjust outcome, particularly where someone, not close to retirement age, has insurance proceeds come in and needs to be in receipt of a disability superannuation pension and will potentially also be levied with an additional 15 per cent tax.