Business advice
and accounting

Our purpose is to help you on your journey as you grow. Learn more about our history, partners and purpose.

Our purpose is to help you on your journey as you grow. Learn more about our history, partners and purpose.

Your partners for Business Service and Advisory, Taxation, Audit, Business Valuation, Forensic Accounting and Business Valuation Services.

Whatever your business, industry or family office, from local or international institutions we bring extensive expertise.

We're one team with a purpose and passion for what we do. Learn about our culture and career opportunities available to you.

Uncovering insights, trends and inspiration to help business grow in an ever-changing world.

We are always looking for ways to engage and give back to our community.

Telephone: +612 9283 1666
Email: admin@esvgroup.com

Level 13, 68 York Street,
Sydney NSW 2000

Why us

Our purpose is to help you on your journey as you grow. Learn more about our history, partners and purpose.

What we do

Your partners for Business Service and Advisory, Taxation, Audit, Business Valuation, Forensic Accounting and Business Valuation Services.

Who do we help

Whatever your business, industry or family office, from local or international institutions we bring extensive expertise.

Work with us

We're one team with a purpose and passion for what we do. Learn about our culture and career opportunities available to you.

What we think

Uncovering insights, trends and inspiration to help business grow in an ever-changing world.

Working to give back

We are always looking for ways to engage and give back to our community.

Contact us

Telephone: +612 9283 1666
Email: admin@esvgroup.com

Level 13, 68 York Street,
Sydney NSW 2000

Simplifying the processes for SMSF

21 August 2019

by Chris Kirkwood

The Government is aiming to simplify the process for Self Managed Superannuation Funds (“SMSF”) to claim exempt current pension income (“ECPI”) through amendments proposed in the 2019/20 federal budget.

Broadly these two measures introduced in the budget are:

1. Anomaly affecting funds in the retirement phase requiring Actuarial Certificates

A fund where all the members are 100% in retirement phase is a ‘segregated fund’ for the purposes of calculating ECPI. Currently, as the law is written, an SMSF cannot use the segregated method for calculation of exempt tax amounts if the members’ total superannuation balances are greater than $1.6 million.

This impacts funds that are solely in the retirement phase. For example, if all members have account-based pensions that have grown in value above the $1.6 million threshold, and the fund was solely in the retirement phase for the year, the fund will still be required to obtain an actuarial certificate for that year.

One of the measures proposed is to fix this anomaly by removing the requirement to obtain an actuarial certificate if the SMSF is solely in retirement phase for the entire income year.

2. Defining segregated current pension assets

The Australian Taxation Office (“ATO”) adopts a view that all of a SMSF’s assets are deemed to be segregated at any point in time when its only superannuation liabilities are in respect to certain retirement phase accounts. Under the segregated method, any income earned, or capital gain realised when a SMSF is solely in retirement phase is deemed to be tax exempt.

This presented complexities in the administrative and compliance processes for SMSFs as they transition into full retirement as they are required to use both the segregated and proportionate method to claim ECPI in the same year.

The second measure proposed is to allow trustees with both accumulation and retirement phase interests during an income year to choose their preferred method of calculating ECPI (either segregated or proportionate method) and elect in advance.

If you have any questions about the upcoming ECPI changes, and what impact they may have on the tax in your SMSF, please do not hesitate to contact your ESV engagement partner on 02 9283 1666.