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Puzzle pieces with open space for rules and green piece for rewrite

Reduced compliance measure for SMSFs doubtfully generous

By Yasmine Masi2 November 2021

The compliance and cost burdens for SMSFs entirely in retirement phase during a financial year have been lifted, but this cost saving measure is unlikely to benefit all SMSFs equally.

 SMSFs will no longer be required to obtain an actuarial certificate to determine their “exempt current pension income” and will be permitted to use the segregated method as all the funds will be “segregated current pension assets”, saving the SMSF around $150 to $200 a year in certificate costs.

However, Townsends Lawyer’s Michael Hallinan says the circumstances where the cost saving measure will be applied are limited and other expenses may have to be incurred. The amendment will only benefit SMSFs which are entirely in pension phase for the year, where the pension liabilities arise from account-based or market-linked pensions.

For SMSFs that were partly in accumulation phase and retirement phase during the financial year, an actuarial certificate is not needed for the period where it was in retirement. For the period it was in accumulation, accounting work will be required to identify the income and expenses of the SMSF.

The measure will not benefit SMSFs where the cost of the additional accounting work may exceed the costs that were saved from not having to obtain an actuarial certificate.

The amendment also benefits SMSFs with assets that were disregarded as small fund assets, as this would have prevented the SMSF from using the segregated method to determine the exempt current pension income.

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