SUPERCentral News
A superannuation lump sum arising from a partial commutation will count towards satisfying the minimum pension payment limit. This is the effect of Self Managed Superannuation Funds Determination 2013/2.
As the final Ruling provides that a member may exercise the election under Reg 995-1.03 (to treat a payment from an income stream as a superannuation lump sum rather than as a superannuation income stream benefit), whether or not the payment arises from a commutation, it is now possible to have payments from an account-based pension paid before age 60 taxed as superannuation lump sums rather than as pension benefits.
The ATO has always been of the view that pension payments must be paid in cash (or its equivalent).
It is possible for a member receiving a pension to elect to have a payment from the super interest supporting the pension to be taxed as a superannuation lump sum rather than as a superannuation income stream payment. This is provided by Taxation Regulation 995-1.03(b).
The Draft Ruling expressly dealt with the position where the member had a binding death benefit nomination which required the benefit to be paid as a pension.
This issue is only relevant to transition to retirement income streams ("TRIS"), as such pensions have both a minimum pension limit and also a maximum pension limit, which is equal to 10% of the account balance. Ordinary account-based pension are not subject to the 10% maximum pension limit.
This was the headline issue from the Draft Ruling. The reasoning of the Draft Ruling was that on the death of the member who was in pension phase, the pension ceased as there was no individual entitled to pension payments, with the consequence that the superannuation interest which was previously supporting the pension now transferred to the taxable side of the fund.
The Draft Ruling provided that if insufficient pension payments were made in respect of a pension, the pension failed to satisfy the relevant requirements of the SIS Regulations and therefore for both SIS and tax purposes, there was no pension and, consequently, the superannuation interest supporting the pension was taken to be on the taxable side of the fund for the entire financial year.
It was only 2 years ago that the ATO released the Draft Pension Ruling. This Draft Ruling, while dealing with the relatively simple issues as to when a pension commences and when a pension ceases, did raise some significant policy issues.
The Draft Ruling took a hardline view as to when a pension commenced as a result of a member request. Essentially, the Draft Ruling provided that a pension could not commence before the date of the member request for the pension.
Residents of NSW, Western Australia and Victoria have the opportunity to transfer business real property they hold in their personal name into their self managed super fund and pay little or no state duty on the transfer.
In general, Child Pensions can only be commenced if the child is under age 18 (at the time of death of the member) or has attained age 18 (but not 25) and be financially dependent on the member at the date of death.
Join SUPERCentral at this year's Accountants' Technology Showcase Australia (ATSA) conference, being held in Brisbane on 14 and 15 October 2013. For more information regarding the conference and the special discount ATSA are offering to our members of $110 off the registration fee for the full two day attendance, click on the above heading.
On the death of a super fund member, the SIS Regulations require the death benefit to be "cashed out" as soon as practicable after the death of the deceased member.
The rate for the 2013/14 financial year is 6.20%. The rate for the previous financial year was 7.05%.
Our associates Townsends Business & Corporate Lawyers have recently launched a new website with expanded online legal services. As a SUPERCentral member you can register using your current SUPERCentral ID and password for fast, easy access to the Townsends Lawyers legal services. To register using your SUPERCentral codes just go to www.townsendslaw.com.au and follow the prompts.
Recent changes to the QLD Duties Act 2001 will bring some joy and relief to SMSF Trustees who have entered into or are considering entering into limited recourse borrowing arrangements where the acquired property is QLD real estate.
One of the most significant SMSF recommendations arising from the Super System Review was the recommendation that in specie transfers of listed securities only be on market to remove the possibility of abuse as to the value and date of the transaction.
While the Government has announced measures to deal with the issue of excess concessional contributions, which arise on and from 1 July 2013, the problem of excess non-concessional contributions remains.
Possibly the most significant market development in super over the last 20 years has been the relative decline of retail funds and the emergence of SMSF and industry funds.