ATO urges caution on pensions

 

The ATO has said the lack of attention being paid to minimum pension payment requirements is “surprising” .......

..... and has urged trustees and practitioners to be wary of their obligations.

 

In 2012, the commissioner agreed to exercise his powers to allow a super income stream to be taken and a fund to continue to claim exempt current pension income (ECPI) where minimum pension payments are not made in certain circumstances.

In an address to a Tax Institute conference, Matthew Bambrick, the ATO's assistant commissioner, SMSF segment, superannuation, noted that an SMSF may self-assess where the underpayment is small, they have not previously self-assessed the exercise of the general powers or they have made a catch-up payment as soon as possible.

In all other circumstances, however, the fund must apply for the ATO to exercise the general powers and must demonstrate the circumstances for the underpayment were outside the control of the trustee, Mr Bambrick said.

“We’ve finalised 242 cases where SMSFs have requested the exercise of this exception and have allowed only 20 per cent. In the remaining 80 per cent of cases, the funds did not demonstrate that the factors preventing payment were beyond trustee control,” Mr Bambrick said.

One example would be if the circumstance was a medical condition, it was not serious and was short term, with no supporting medical documentation.

Another example involved circumstances that prevented payment being made being experienced by one or some trustees, but not all of them. Mr Bambrick noted all trustees are equally responsible for running the fund.

“Be careful in this area. It’s surprising how many SMSFs and their advisers carefully plan the sale of assets, creating capital gains in the first year the member is in retirement but then forget to pay the minimum pension amount, meaning they place at risk the ability to claim ECPI,” Mr Bambrick said.

 

Written by Katarina Taurian
Thursday, 19 March 2015
smsfadviseronline.com.au

 

Any advice contained in this website is of a general nature only and does not take into account your circumstances or needs. You must decide if this information is suitable to your personal situation or seek advice.

Rolanda has been my financial adviser for 20 years. I have always found her to be highly intelligent, knowledgeable and professional in her career. Rolanda is accessible at all times and patiently explains terms that I do not fully understand. I can highly recommend Rolanda and it is a pleasure to do so. I do this with the utmost confidence. Marcia Montgomery (Retiree – home duties and ex-clerk with Water Board)
I retired Oct 2012, and seeking Financial Advice for my retirement funds, I decided to have Rolanda look after my financial affairs, and so happy I did. Since my retirement I am extremely comfortable with Rolanda’s advice, experience and strategies and the returns on my investments. Rolanda is my "Breath of Fresh Air" at this stage of my life and she makes herself available 24/7 should you need to talk with her. Steve Hoad (Ground Engineer, Qantas)
In 1997 I left Energy Australia and decided to join Rolanda Adams Financial Services for the financial support and advice that I would need into the future. That decision has proved a very good one and I am still with Rolanda who has given me advice and friendship over those many years. The advice given has ensured that my investments have been protected and the major losses, of some, during the GFC was not felt by me unduly. Rolanda and her team are very easy to contact at any time and one is always received in a most professional manner. I would be most happy to recommend Rolanda Adams Financial Services to all who need financial services. Graham Fleeton (Manager, Property Insurance Group Energy Australia (Ausgrid))
Rolanda has been my Adviser for the past 18 years. Through her wide industry experience and professional expertise she has ensured the sound development and ongoing management of my investments. Her advice has invariably been sound, timely and entirely tuned to meet my personal needs in retirement. She has a friendly, engaging manner and is always readily available to address any of my concerns. I have no hesitation in recommending her. Neil O'Keeffe (Chief Inspector (retired), Australian Customs Service)

© 2021 Rolanda Adams Financial Services Pty Ltd. All rights reserved. Site by PlannerWeb.