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SUPERCentral SMSF governing rules update timeline
February 2024
Returned First Home Super Saver Payments
Tax Act/Regs
Returned First Home Super Saver Payments
Other Act/Regs
- Improving the flexibility of BDBNs
- Making pension commutation requests automatic
SMSF Practice
Special Purpose Financial Statements – no obligation to issue general purpose financial statements
Improvements
March 2023
- Extension of the Covid-19 pension drawdown relief to the 2022/23 financial year
The 50% pension drawdown relief for account type pensions was extended to the 2022/23 financial year. Consequently, for account based pensions, transition to retirement pensions and market linked pensions the minimum pension drawdown requirement for the 2022/23 financial year will be satisfied by paying 50% of the statutory minimum drawdown which, but for the extension, would otherwise apply. The Governing Rules were amended to reflect this extension
- Commutation of non-capped incomes streams to comply with the commutation authorities
Defined benefit or market linked pensions which commenced on or after 1 July 2017 could not, due to the statutory commutation restrictions applying to those pensions, be commuted to ensure that there was no breach the transfer balance cap. However, as a result of the amendment of the statutory commutation restrictions, these pensions could now be commuted to the extent necessary to remove any breach of the transfer balance cap. The Governing Rules were amended to reflect this extension.
Sis Act/Regs
February 2022
- Restructure of legacy pensions
This change permits (once the enabling legislation is introduced) the restructure (at the option of the relevant member) of a legacy pension by fully commuting that pension and using the commutation proceeds (including the value of any pension reserves) to either:
- purchase (subject to the transfer balance cap of the relevant member) an account-based pension
- the creation of an accumulation interest; or
- the payment of a lump sum benefit, for the relevant members.
- Extension of minimum pension relief to 2021/22 financial year
This change permits the trustee (at the option of the relevant member) to apply the 50% reduction in the minimum pension limit to account-based and market-linked pensions of the relevant member.
Sis Act/Regs
- Covid-19 refund contributions
This change permits a member who had previously accessed their super benefit using the Covid-19 access condition, to make contributions to super up to the amount which had been released.
Tax Act/Regs
- Definition of Spouse
The definition of “Spouse” has been updated to match the definition used in the Marriage Act 1961
- Application of Family Law Act super splitting provisions to Western Australian de facto couples
The extension of the super splitting powers under the Family Law Act to Western Australian de facto couples (following the conferral by the WA Parliament) has been mirrored in the Governing Rules
Other Act/Regs
- Binding Death Benefit Nominations & divorcing spouses
This change provides that a BDBN which nominates a spouse will be invalidated to the extent of that nomination if, after the nomination has been made, divorce or property proceedings are commenced and the BDBN does not expressly provide to the contrary
- Variation of pensions which commenced before Governing Rules applied
This change permits the trustee and the relevant member to vary the reversionary status of a pension which commenced before the Governing Rules applied to the fund without having to stop and restart the pension and, if pension had “1 January 2015 status” for Centrelink purposes thereby risk losing that that status.
SMSF Practice
- Exchange Trade Funds based on Crypto-Assets
The list of permitted investments has been expanded to include Exchange Traded Funds where underlying assets are Crypto-Assets.
Additionally, the existing definition of "Crypto-assets" has been broadened to expressly include non-fungible tokens (NFTs) and stablecoins.
Improvements
February 2021
Transition to retirement pension (“TRIS”) moving to retirement phase
A TRIS no longer meets the definition of transition to retirement pension in SIS sub-reg 6.01(2) when the pensioner has met a condition of release in respect of which the cashing restriction is nil. Since 1 July 2017, the TRIS automatically moves into retirement phase as soon as a member reaches age 65. For the other conditions of release, members need to notify the trustee for the TRIS to move into retirement phase (ATO GN2019/1). The pension will thereafter continue as an account based pension under SIS sub-regulation 1.06(9A) and Schedule A of the Governing Rules.
Minimum pension payment in the year of death of pensioner member
In the article “Starting and stopping a pension”, the ATO has clarified minimum pension payment requirements for account based pensions in the year of death of the pensioner, as below:
• single life pension – no minimum pension payment is required;
• auto-reversionary pension that continues to the reversionary pensioner – minimum pension is payable in the year of death of the pensioner.
A TRIS no longer meets the definition of transition to retirement pension in SIS sub-reg 6.01(2) when the pensioner has met a condition of release in respect of which the cashing restriction is nil. Since 1 July 2017, the TRIS automatically moves into retirement phase as soon as a member reaches age 65. For the other conditions of release, members need to notify the trustee for the TRIS to move into retirement phase (ATO GN2019/1). The pension will thereafter continue as an account based pension under SIS sub-regulation 1.06(9A) and Schedule A of the Governing Rules.
Minimum pension payment in the year of death of pensioner member
In the article “Starting and stopping a pension”, the ATO has clarified minimum pension payment requirements for account based pensions in the year of death of the pensioner, as below:
• single life pension – no minimum pension payment is required;
• auto-reversionary pension that continues to the reversionary pensioner – minimum pension is payable in the year of death of the pensioner.
Sis Act/Regs
Abolition of anti-detriment payments
From 1 July 2017, superannuation funds were only allowed to effect anti-detriment payments of eligible death benefits in respect of members who died on or before 30 June 2017 and the payment had to be made by 30 June 2019. From 1 July 2019, anti-detriment payments were no longer available. Former section 295.485 of the ITAA 1997 which made provision for the tax deductions that enabled anti-detriment payments to be made has been repealed.
Tax Act/Regs
General investment clause
A general investment clause has been added to Rule 3.4 as an integrity measure to bolster trust fund investments in any authorised investments.
Clarification of what happens if reversionary beneficiary ceases to be eligible to receive a death benefit income stream
A reversionary beneficiary may survive the pensioner but as at the death of the pensioner may be a SIS dependent under the SIS Act but not an eligible recipient of a death benefit income stream.
A general investment clause has been added to Rule 3.4 as an integrity measure to bolster trust fund investments in any authorised investments.
Clarification of what happens if reversionary beneficiary ceases to be eligible to receive a death benefit income stream
A reversionary beneficiary may survive the pensioner but as at the death of the pensioner may be a SIS dependent under the SIS Act but not an eligible recipient of a death benefit income stream.
Improvements
May 2020
COVID-19 Superannuation Measures
The Governing Rules will be amended to give effect to the Federal Government’s coronavirus economic response that allows account based and similar pensions to reduce the annual minimum pension limit for the 2019-20 and 2020-21 financial years. This measure is to assist super pensioners to avoid selling assets with loss positions to fund annual pension payments.
Investment strategy review
Rule 5.7(f) of the Governing Rules has been amended by the insertion of “review regularly” to “formulate and give effect to an investment strategy”. At the same time, the reference to “must review regularly that investment strategy” at the end of the subsection has been deleted.
This amendment is to align Rule 5.7(f) totally with sub-regulation 4.09(2) of the SIS Regulations. Sub-regulation 4.09(2) provides that “the trustee of a superannuation entity must formulate, review regularly and give effect to an investment strategy.” The “review regularly” requirement was formally introduced into SIS sub-regulation 4.09(2) as part of the Government’s Stronger Super reform package.
The amendment will also give weight to the current ATO “best practice” approach to investment strategy compliance.
Sis Act/Regs
NALI and NALE
Under the new rules, income amounts attributable to non-arm’s length expenditures, outgoings or losses of a SMSF (NALE) are generally treated as non-arm’s length income (NALI), in addition to inflated income derived from non-arm’s length schemes.
As a result of the changes, it is important for SMSF trustees to distinguish the capacity in which they provide services or perform duties for their SMSFs. If the services are provided by the trustee in the capacity as an outsourced party, any undercharge or no charge will result in NALI. On the other hand, if the duties or services are performed by the trustee as a trustee of the fund, they would not be entitled to receive any remuneration. The Governing Rules amendment will strengthen the “capacity” distinction and enable the trustee acting in the outsourced third-party capacity to be remunerated on terms which meet both the existing Section 17B SIS Act requirement and the new NALE requirements.
Tax Act/Regs
Mutual Capital Instruments
The Governing Rules have been amended to expressly permit investment in Mutual Capital Instruments (“MCI”). Recent changes to the Corporations Act 2001 allow a so-called qualifying ‘mutual entity’ to raise capital through an MCI.
The change has been effected by the inclusion of MCIs to Rule 3.4 (p). Rule 1.2 Dictionary has also been updated to include the MCI definition.
Other Act/Regs
Trustee exercise of power
It is recognised that in the exercise of a trustee power, the trustee’s other duties may affect the exercise of such power, in addition to their other interest or the interest of their associates.
Rule 5.5(d) has been amended to include interest “and duties” that may be affected by the exercise of the power. Rule 1.2 Dictionary has also been updated to include the meaning of “Associates”.
Improvements
April 2019
Maximum number of fund members - Maintain current maximum four members with provision to increase to any "greater number" to be specified by the SIS Act. This addresses the Government's proposal to increase the maximum number to six.
Automatic pension restart - Provision for a pension to recommence automatically should a Fund fail to meet an applicable pension standard in the previous year.
Binding death benefit nomination - Addition of the term "non-lapsing" to reinforce the indefinite duration of BDBN.
Sis Act/Regs
Crowd-sounced funding regime - Permit investment in crowd-sourced fund offers issued by unlisted proprietary companies.
Notified Foreign Fund Products - Allow the Fund to invest in NFFP registered in Australia.
UK pension transfer - Update provisions in relation to permitted access conditions and mandatory payment methods in accordance with UK Legislation.
Other Act/Regs
May 2018
- First Home Super Saver Scheme – allow trustees to act upon release authorities issued in conjunction with this scheme
- Downsizer Contributions – permitting trustees to accept non-concessional contributions which qualify as downsizer contributions
- Early Stage Innovation Companies – allow trustees to acquire and hold shares in companies which qualify as ESICs
Tax Act/Regs
- Digital Currencies – permit trustees to acquire, hold, receive contributions in the form of and to pay benefits in the form of digital currencies
Other Act/Regs
November 2017
Innovative superannuation income stream regulations – which permit self managed superannuation funds to issue lifetime guaranteed income streams where the income stream is wholly supported by a purchased annuity
Sis Act/Regs
Contribution splitting – by transfer of allocated amount to another superannuation fund
Tax Act/Regs
NSW transfer duty changes – transfer of primary production land as an in specie lump sum benefit payment – to allow these transfers to access a recently introduced transfer duty exemption
Other Act/Regs
- Binding death benefit nominations – ability to restrict nomination to specific interests – ensuring that composite nominations are treated as separate nominations for purpose of determining their validity
- Expanded list of authorised investments – investing in limited liability partnerships as a limited partner
SMSF Practice
March 2017
- Conferral of powers on trustee to respond to the introduction of the Fair and Sustainable Superannuation changes
- Modifying terms of pensions payable in respect of deaths which occur on or after 1 July 2017 - so that such pensions must continue to be paid until the pension account is exhausted or until the pension is cashed out
- Allowing trustees to commute a pension pursuant to a commutation authority
- Expressly permitting the trustee to accept catch up contributions
- Permitting the trustee to purchase superannuation annuities for members
Sis Act/Regs
- Permitting trustees to acquire shares through crowd-sourced funding offers
Other Act/Regs
- Permitting financial managers of incapable members to exercise the member’s rights to claim or vary benefits or to make or vary binding death benefit nominations
- Restricting the ability of Enduring Attorneys from making or revoking binding death benefit nominations where the instrument appointing the attorney expressly precluded from making or varying binding death benefit nominations
SMSF Practice
October 2016
- Modification of SIS Contribution Acceptance Rules for CGT non-concessional contributions arising from earnout payments
Sis Act/Regs
- Express reference to conversion of payment split interests under Reg 14G of the Family Law Splitting Regulations
- Imposition of age 55 precondition for UK Benefit Transfers
Other Act/Regs
- Disclaimer of death benefits
SMSF Practice
October 2015
- Certification period for Terminal Medical Condition access changed from 12 to 24 months
- Variation of Release Authorities
Sis Act/Regs
- Change UK Pension Transfers (QROPs) rules
Other Act/Regs
- Variation of payment terms of death benefit payments
- Validity of BDBNs – if valid at date of making not invalidated by Governing Rule change
SMSF Practice
May 2015
- Grandfathered insurance arrangements
Sis Act/Regs
- Release authorities – Excess contributions, Division 293 tax
Tax Act/Regs
- Trustee Authorised Investments
- Commutation of pensions up to Unrestricted non-preserved component
Other Act/Regs
- Saving provisions for BDBN – to address Munro v Munro decision
Cases
- Medical evidence for removal of trustee
- Appointment of Legal Personal Representation as trustee pending payment of death benefit
SMSF Practice
August 2014
- SuperStream payments and data standards
Sis Act/Regs
- Commutations of complying pensions
- Release Authorities
Tax Act/Regs
- Unwinding holding trusts
Other Act/Regs
- Insurance cover arrangements
- Conditional Death Benefit allocations
- Member initiated trustee changes
SMSF Practice
November 2013
- Higher Income Contributions Tax
- New Excess Concessional Contributions Tax arrangements
Tax Act/Regs
- Pension Payment change – SMSF 2013/2
Other Act/Regs
- Revised LRBAs
- Revised Insurance cover arrangements
SMSF Practice
March 2013
- Revised Risk & Investment Strategy provisions
- Revised Accounting Rules
- Revised Statutory Covenants for SMSFs
- New Information Standards – Benefit Rollovers & Transfers
- Approved Auditor
- Trustee Admin Penalties
- Rectification Directors
- Education Directors
Sis Act/Regs
- WA Duty concession: in specie transfers
- Retail trading of CGS & Corporate Bonds
Other Act/Regs
- Revised LRBA provisions
- Operational Risk Reserve
SMSF Practice
June 2012
- Remuneration of Trustees (s17B)
- Extension of 25% discount on min pension payments
Sis Act/Regs
- Small excess concessional contributions refund
Tax Act/Regs
- Low Income Super Contributions
- QROPS Changes
- Carbon Tax
Other Act/Regs
- Weighted Voting – Switch off
- Power to conduct business
- Court power to remove trustee
- Unitisation of earnings
- Lender’s wording for LBRs
SMSF Practice
November 2011
- Collectibles & Personal Use assets – special investment rules
Sis Act/Regs
- Forfeiture Orders
Other Act/Regs
- Ring fencing of assets & Custodians
- Terminal medical cover – to permit t/ee to take cover
- EPOAs exercising commutation rights
- BDBNs – separated but not divorced spouse
- Deemed contributions
SMSF Practice
May 2011
- Generic Minimum Pension Relief
- Acquisition of assets from related super funds on breakdown of relationships
Sis Act/Regs
- Changes of trustees –excluding corporate trustee as member
Other Act/Regs
- Payment of benefits by Promissory Notes
- Allocation of deemed contributions
- Partial anti-detriment payments
- Fund mergers
SMSF Practice
September 2009
- Min Pension Relief 2009/10
Sis Act/Regs
- SIS Compliance – restricted to SMSF rules – response to Donovan v Donovan
Cases
- Death of Member/Trustee – LPR can be appointed as trustee
- Death of sole surviving member/trustee
- Reserves – contribution reserves explicit
- Partial BDBNs
SMSF Practice
April 2009
- Temporary Residents super access changes
- Min Pension Relief for 2008/09
Sis Act/Regs
- Same Sex/De facto Relationships
- WA Duties Act – in specie transfers
Other Act/Regs
- Trustee dealing in B/Es & Negotiable Instruments (supergearing)
- Paying insurance from reserves
- Tailoring terms of account-based pensions (Exotic pensions)
SMSF Practice
November 2008
- First Home Savers Accounts
Other Act/Regs
- Enduring Powers of Attorney – access benefits/BDBNs
- Internal rollover from complying to market linked pensions
SMSF Practice
July 2008
- Instalment warrants – further provisions
- Terminal medical condition
Sis Act/Regs
- External rollover of complying pension to market linked pension
SMSF Practice
December 2007
- Instalment warrant /geared investments provisions
Sis Act/Regs
- Real estate transfers – concessional rates
Other Act/Regs
July 2007
- Simplified Super Changes – account-based pensions, excess contribution taxes, return excess fund capped contributions, pension commutation restrictions
Sis Act/Regs
- Simplified Super Changes – TFNs, release authorities
Tax Act/Regs
- Simplified Super Changes – allocated to account based pension limits
SMSF Practice
November 2006
- Contribution Limits as per 2006 Budget
Tax Act/Regs
- Anti-detriment accounts
- Grandfathering of BDNs made before conversion to SUPERCentral
SMSF Practice