Hot Issues
spacer
Financial advice is the leading trigger to review insurance inside Super
spacer
Opinion – 2018 to be the year of the machine
spacer
Rising risks to the status quo
spacer
UPDATE: Australia's vital statistics
spacer
As share prices rise, the risk-return trade-off gets tricky
spacer
Technical expert flags top 3 traps with CGT relief
spacer
Become a better investor through your holiday reading
spacer
Australia's vital statistics
spacer
Made in Albania? How globalisation is creating challenges for Chinese policymakers
spacer
Our Advent calendar for 2017
spacer
For the young it a question of engagement
spacer
Address Under-insurance at Personal Finance Level - Global study
spacer
Realism vs reality - working part-time as retirees
spacer
SMSFs warned on ‘ticking time bomb’ with outdated deeds
spacer
Statutory wills are underutilised in estate planning
spacer
Resources on our site to help you, your family and your friends.
spacer
Calls to Review ASIC's Definition of Lapse Insurance
spacer
Paperwork bungles lead to $38k in payments
spacer
Self-employed? Don't miss out on super
spacer
Australian Dietary Guidelines and healthy eating chart (PDF)
spacer
Big concessions looking likely for transfer balance limit: ATO
spacer
Raft of superannuation measures enter Parliament
spacer
US Fed policy: Normalisation begins
spacer
What the gig economy may mean for your super
spacer
Powerful Budgeting, cash flow and Super Tools available on our site.
spacer
Australia's leading causes of death - ABS
Article archive
spacer
Quarter 4 October - December 2017
spacer
Quarter 3 July - September 2017
spacer
Quarter 2 April - June 2017
spacer
Quarter 1 January - March 2017
spacer
Quarter 4 October - December 2016
spacer
Quarter 3 July - September 2016
spacer
Quarter 2 April - June 2016
spacer
Quarter 1 January - March 2016
‘Tens of thousands’ of SMSFs at risk with ECPI

The Actuaries Institute has addressed the ATO with significant concerns about a recent interpretation related to exempt current pension income (ECPI), fearing many SMSFs will make incorrect claims as a result.

 

 

In a letter to the tax office, copying in minister for revenue and financial services Kelly O’Dwyer, the institute referred to the ATO’s recently confirmed view that if an SMSF was fully in pension phase for any part of a tax year, it cannot use the unsegregated method for all of its assets for the whole of that tax year.

Rather than having a choice over whether to segregate certain assets to support pension liabilities, this interpretation assumes assets are ‘deemed’ to be segregated at a point in time if the fund’s only superannuation liabilities are in respect of account based type pensions, the letter said.

“This will force many funds to use two different methods, the segregated and unsegregated methods, to claim ECPI in the same income year, adding administrative complexity. The Actuaries Institute is concerned that this interpretation is at odds with long standing industry practice, potentially putting tens of thousands of funds at risk of claiming ECPI incorrectly,” the letter said.

“We also believe that the ATO’s interpretation does not reflect the policy intent and will add significantly to the compliance costs of funds claiming ECPI with no clear gain to tax revenues.”

The institute has recommended the ATO re-considers its position to allow long standing administrative practices to continue.

“If the ATO believes there is no alternative interpretation than their current view we request clarification be sought from Treasury and that, if necessary, the legislation be amended to match established practice,” the institute said.

“Given the uncertainty this is causing in the industry, we also recommend that the ATO clarifies that it will not be requiring funds to comply with this new interpretation for the 2017 and 2018 income years.”

Speaking to SMSF Adviser, general manager of Accurium, Doug McBirnie, said he hopes this latest lobbying effort will pave the wave for a quick resolution.

“We are very pleased to see the Actuaries Institute address this issue with the ATO on behalf of the SMSF industry. The ATO’s recent guidance on this has put actuarial certificate providers in a difficult position and created uncertainty for SMSF practitioners and their clients,” he said.

 

KATARINA TAURIAN
13 Jul 2017
www.smsfadviser.com