The reform Regulations have now been finalised. They are largely unchanged form what was initially proposed. A couple of subsequent discussion topics have been abandoned. Notably the notion that actuarial certificates will no longer be required and that complying pensions could be commuted where they contributed to a transfer balance cap issue. Neither of these will proceed...
From 1 July 2017, the Government will remove the anti-detriment provision which allows superannuation funds to claim a tax deduction for a portion of the death benefits paid to eligible dependants. A payment may still be made until 30 June 2019 provided the member died no later than 30 June 2017 This benefit was often the only...
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...