On 15 January 2018, Craig commences a $3 million superannuation income stream in his SMSF, Cormac Super Fund. Craig’s transfer balance account is $3 million and he has a $1.4 million excess transfer balance on this date. On 20 January, the Commissioner issues a determination to Craig stating his crystallised reduction amount as $1,401,765 ($1.4 million excess...
We do not yet have a process for notifying the ATO of the commencement of a pension but they are clearly assuming that this will occur within days of commencement as this type of example is common in their explanatory notes. Andrew has a personal transfer balance cap of $1.6 million. He starts a second pension worth...
Consider Julian and Justine, both aged 70. They each have reversionary pensions and are the only fund members. Julian has a $4m balance and Justine, $2m. Fund assets comprise a $5m property plus assorted shares, fixed interest and cash. On 30th June 2017 they will reset the cost bases of selected assets. These will include the property...
There seems to be some confusion amongst commentators as to the virtues of reversionary v non-reversionary pensions from 1 July 2017. If the only issue to be considered is tax, reversionary pensions must win. Consider the following scenario; Jack & Rachel are both 66 with a $1.6m balance each in pensions. Jack dies in August 2017. By...
A previous article referred to the loss of exempt current pension income status to those pension accounts that must now be commuted to accumulation. Apart from the obvious tax ramifications for members who must now convert their accounts from pension to accumulation there is also a death benefit consequence that must be considered. If a member...
This is a continuation of the previous article which considered ways of reducing a member’s balance to maximise their ability to make non-concessional contributions. Asset Allocation In this financial year assets may be allocated to different member accounts. These are segregated assets. If the high return assets are segregated to the member with the smallest balance a degree...
Previously we discussed the usefulness of planning a reduced 30 June balance for the purposes of maximising non-concessional contributions. We also noted that even a minor reduction could have a major effect. The following possible strategies should be considered prior to 30 June. These are important where a trigger point is imminent but may also be...
The ability of a member to withdraw from their taxable component and recontribute as a non-concessional contribution, thereby converting to tax exempt component, is still available now that the lifetime NCC limit proposal has been abandoned. The timing of the strategy, after this financial year has become more important. Appreciating that any member who could take advantage...
The small business CGT contributions are not affected by the super reforms. Neither is the ability for an unlimited structured settlement (compensation claim) contribution to be made. The issue is the timing. Either of the above have the realistic potential to take the member balance over $1.6m so, though they are not counted against the non-concessional cap,...
Death benefit pensions payable to children (to age 25) have special rules. A child’s transfer balance cap is generally determined by the value of the deceased’s retirement phase assets that they receive. It will depend on: whether the child started to receive the pension before 1 July 2017; if they started to receive them after that time, whether or...