ATO out of step with APRA on pension treatment

Mike Taylor

Managing Editor and Publisher

14 April 2025

The major accounting groups have urged the Australian Taxation Office (ATO) to harmonise its regulatory approach to pensions with that of the Australian Prudential Regulation Authority (APRA).

The accounting groups have pointed to inconsistencies between the approach adopted by the ATO on the cessation of pensions due to a failure to make minimum pension payments.

In submission to an ATO feedback forum, the joint account groups comprising CPA Australia, Chartered Accountants ANZ, the Institute of Public Accountants (IPA) and the SMSF Association said large segments of the industry “respectfully disagree with the ATO’s view that an underpayment of the minimum pension amount causes a pension to cease and cannot be rectified”.

It went on to cite an ATO letter to the industry associations earlier this year which states: “it is not possible for a pension to comply with the standards in one year, not comply the next, and then comply again in subsequent years” pointing out that this was at odds with how APRA operates under the Superannuation Industry (Supervision) Act (SIS Act).

“…we are aware of non-ABPs being treated differently for SIS purposes, despite having the same fundamental pension principles and tax outcome,” it said.

“We have also been told that APRA has waived certain pension requirements, ensuring continued compliance under SIS and avoiding unintended tax consequences. This includes scenarios where trustees have miscalculated pension amounts or failed to make a final payment in a given financial year.

“APRA’s actions in regulating large funds have direct income tax consequences, making it critical that both regulators maintain an aligned and consistent approach to the interpretation and application of SIS regulations. No segment of the superannuation sector should be unfairly disadvantaged when addressing annual pension underpayments,” the joint bodies said.