Recent Tax and Regulatory Developments Affecting SMSF Audit

Television Education Network’s The 4th Annual SMSF Audit Conference

Gold Coast

LEGISLATIVE REFERENCES
All references in this paper are to the Superannuation Industry (Supervision) Act 1993 (SIS Act), the Superannuation Industry (Supervision) Regulations 1994 (SIS Regs) and the Income Tax Assessment Act 1997 (ITAA97) and the Income Tax Assessment Act 1936 (ITAA36) unless otherwise stated.

TREATING PENSION PAYMENTS AS LUMP SUMS AND ACCESSING THE LOW RATE CAP
This issue was the “flavour of the month” last year. It results in the “best of both worlds” where a transition to retirement income or account based pension is treated as a pension for the super fund (resulting in the fund being in “pension phase”) and allowing the member to treat the pension as a lump sum so that they can access the low rate cap (which lump sums to be tax free or taxed at 15% rather than have the pension taxed at marginal tax rates less a 15% rebate). Although arrangement works for member of any age, it holds little benefit for member’s aged 60+ given their benefits will be tax free in any event. The ATO has confirmed that this strategy works.1
The Government made 2 announcements in the 2016 Federal budget, which if implemented, will sound the deal knell for the arrangement. They are that member’s no longer be able to access the low rate cap for pension payments and that transition to retirement income streams will cause super funds to go into pension phase.

How does it work? 

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