The ATO has released SMSF News Alert 2018/3 under which it acknowledges a defect in the transfer balance cap regime which can cause the debit on the commutation of a market linked pension (or life expectancy pension) to equal nil. This can cause a double counting when the new pension is commenced (and potentially for the member to exceed their transfer balance cap).

The Alert notes that the Government will look to fix this issue, but in the meantime the ATO will not take compliance action:

if a fund does not report the transfer balance account events of the commutation or the commencement of the new market-linked pension;
(at this stage) where the fund has reported the transfer balance debit for the commutation as other than nil.

To discuss this further or for more information please contact:

Phil Broderick
Principal
Sladen Legal
T +61 3 9611 0163 l M +61 419 512 801
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
E: pbroderick@sladen.com.au

Ashleigh Eynaud
Lawyer
Sladen Legal
T +61 3 9611 0129
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
E: aeynaud@sladen.com.au