We have received many questions from readers about how the new $1.6 million transfer balance cap will operate when a fund member dies, especially if the fund member has arranged for his or her spouse to receive a superannuation death benefit pension, including a reversionary pension. This article provides a brief ... Read more
SMSF pensions
A member of an SMSF can choose from only two types of pensions – an account-based pension or a transition-to-retirement pension (what we call a ‘TRIP’). (If you retired before 20 September 2007 however, you may be receiving another type of pension from your SMSF.)
An account-based pension gives you unlimited access to your account balance but how long your money lasts depends on the investment returns that your pension assets deliver, and the amount you withdraw each year. You also must withdraw a minimum amount each year, based on your age. You must follow special rules when running a SMSF pension, including minimum pension payments and reporting exempt current pension income (see SuperGuide section Retirement phase (formerly called Pension phase)) .
If you plan to run an accumulation account and a pension account within your SMSF, then you need to segregate the assets supporting the SMSF pension, or obtain an actuarial certificate.
Note: You can also arrange for your account-based pension to be paid as a reversionary pension to your spouse after you die.
For more detailed information on SMSF pensions, see the following SuperGuide links:
- Retirement phase (formerly pension phase)
- Types of super benefits
- Starting an SMSF pension
- Minimum super pension payments
- Transition-to-retirement pensions
- $1.6 million transfer balance cap
- Actuarial certificates
For more information on SMSF pensions see the following SuperGuide articles:
Set out below are all SuperGuide articles referring to SMSF pensions.
SMSF pension earnings remain tax-free after death
When a superannuation account enters retirement phase, the earnings on assets financing the super pension are exempt from tax, subject to meeting minimum pension payment rules. What this means is that capital gains, dividend income, interest income and any other type of income that the super pension account receives is ... Read more
Anti-detriment payments banned since July 2017
In the 1980s and 1990s, anti-detriment payments were always considered the pointy end of superannuation and very few Australians took advantage of the rules allowing a refund of a member’s lifetime superannuation contributions tax payments. In more recent years, a greater number of super fund members were taking ... Read more
Estate planning: How can an SMSF live forever?
Q: It has been suggested, that a family self-managed super fund (SMSF) can become a multi-generational tax haven, which can go on into perpetuity, provided that you establish a special corporate trustee, as well as an SMSF Will. I thought that the super money could not remain in the fund indefinitely because eventually ... Read more
Is my super pension counted when applying for the Seniors Health Card?
Q: I have searched numerous websites but cannot find a simple answer. I intend starting my allocated pension next month but can’t find out if I am entitled to the Commonwealth Seniors Health Card. The Centrelink info sheet quotes income limits but this appears to turn into ‘adjusted taxable income’. My allocated ... Read more
Guest contributor: You don’t need $1 million in super to start an SMSF
Guest contributor: Meg Heffron, the author of this article, is co-founder and a Director of Heffron SMSF Solutions – a firm that specialises in SMSFs. She is a qualified actuary with more than 25 years of superannuation experience. Depending on who you believe, self-managed superannuation funds range from being the ... Read more
Why Australians leave large super funds and choose SMSFs
Not so long ago, many in the super industry predicted that Australia’s love affair with SMSFs would fade (when there were about 400,000 SMSFs), and some commentators announced that the number of SMSFs operating had peaked due to our small population. Even this year, I have seen comments predicting the demise of ... Read more
SMSFs: Transfer Balance Account Report requirements
Guest contributor: Meg Heffron, the author of this article, is co-founder and a Director of Heffron SMSF Solutions – a firm that specialises in SMSFs. She is a qualified actuary with more than 25 years of superannuation experience. It would be hard for anyone interested in SMSFs to have missed the fact that a ... Read more
Compliance alert! 85% of SMSFs exempt from quarterly event-based reporting
Note: From 1 July 2018, SMSFs must report events that affect a fund member’s transfer balance to the ATO on an events basis (which the ATO has since confirmed must be reported quarterly if a SMSF has a fund member with a total superannuation balance of $1 million or more). The SMSF trustee must report this event using ... Read more
SMSF asset valuations: Why the ATO is taking greater interest
In recent speeches, ATO representatives have highlighted the increased importance of SMSF asset valuations since the introduction of the July 2017 super changes. SMSF asset valuations have been a compliance requirement for many years. According to the ATO, the ATO’s valuation guidelines for SMSFs continue to apply ... Read more
Defined benefit pensions and the $1.6 million transfer balance cap
Every Australian entering retirement phase with superannuation benefits, now needs to monitor his or her very own retirement cap. Since 1 July 2017, the $1.6 million transfer balance cap represents the maximum amount that you can transfer to retirement phase to support a super pension. The transfer balance cap will be ... Read more
CGT relief and the $1.6 million transfer balance cap, and TRIPs
Note: If you are claiming the CGT relief, you must apply for the temporary relief BEFORE you lodge your super fund’s 2016/2017 tax return. The ATO has extended lodgement date for the 2017 SMSF returns until 30 June 2018. The CGT relief is available if the asset/s involved were owned by the SMSF were held continuously ... Read more
