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SMSF pension phase members compliance obligations approaching
Self-managed superannuation fund (SMSF) members in the pension phase should not overlook their compliance obligations as they relate to pension payments, the SMSF Association has urged.
The association said pension phase members needed to ensure they had met their minimum pension payments by 30 June, and that they should not overlook withdrawing their minimum pension amount for the 2016/17 financial year.
The SMSF Association’s chief executive, John Maroney, said if members were in the transition-to-retirement phase they must take care not to exceed the maximum payment.
“If you don’t take your minimum pension, the assets supporting the pension account are deemed not be in retirement phase for the entire financial year, meaning it loses its tax exemption status,” Maroney said.
“This means that earnings and capital gains of the fund will be taxed at 15 per cent (or 10 per cent for discount capital gains). For SMSFs realising significant capital gains in 2016/17, losing the tax exemption could significantly disrupt retirement strategies.
“Although the ATO [Australian Taxation Office] has a very narrow exemption for funds with a very small underpayment, it is better to ensure that all obligations are properly met instead of needing to correct any mistakes.”
Maroney warned that there was also the possibility of members losing all their entitlements to the transitional capital gains tax relief the Government was offering to reset the cost base of the assets supporting pension accounts affected by the new transfer balance cap and transition to retirement pension rules.
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