Review of transfer balance cap debit for market linked or life expectancy pensions remains on hold until November

On 1 September the ATO released their awaited guidance on the transfer balance cap (TBC) assessment of commuted market linked and life expectancy (term) pensions.

In June 2020 law was passed that will apply retrospectively from 1 July 2017 outlining the methodology for calculating the TBC debit of a market linked pension or defined benefit life expectancy pension that was fully or partly commuted on or after 1 July 2017.

The ATO identified funds will need to review transfer balance account debits previously reported to them. This latest guidance again extends this review requirement to November 2020 with the ATO anticipating to again provide additional guidance on the retrospective reporting requirements before the end of November.

The ATO has acknowledged that where an SMSF has been wound up it will not be possible to review prior reporting. It was also confirmed that in the new methodology, the reference to ‘the total amount of superannuation income stream benefits the person was entitled to receive before the start of the financial year the commutation takes place’ is equivalent to the actual pension payments made between 1 July 2017 and the year the commutation occurs.

Further detail on the methodology that will need to be used when reviewing/reporting a TBC debit for one of the relevant capped defined benefit income streams can be found in our technical article here.

ATO: Timeframe for reviewing reporting of commutations of market-linked pensions

Extending the age for bring-forward contributions to 67 not yet legislated

The bill to extend the eligible age for utilising the non-concessional contribution bring-forward rule to age 67 without needing to satisfy the work test or have the contribution treated as an excess non-concessional contribution is still with parliament after first being introduced in May this year. Today is the last sitting day for September and if the bill does not pass today, we may be waiting until at least October for this to become legislated.

Treasury Laws Amendment (More Flexible Superannuation) Bill 2020

Increasing the maximum number of members in an SMSF back on the table

A measure proposed in the 2018-19 Budget to increase the number of members allowed in an SMSF from 4 to 6 was seemingly put aside prior to the election. However, this week we have seen a bill introduced to the Senate that would implement this change.

The bill has been referred to the Senate Economics Legislation Committee with a report due on 4 November.

Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020

Search by keywords


This information is general information only and not intended to be financial product advice, investment advice, tax advice or legal advice and should not be relied upon as such. As this information is general in nature it may omit detail that could be significant to your particular circumstances. Scenarios, examples, and comparisons are shown for illustrative purposes only. Certain industry data used may have been obtained from research, surveys or studies conducted by third parties, including industry or general publications. Accurium has not independently verified any such data provided by third parties or industry or general publications. No representation or warranty, express or implied, is made as to its fairness, accuracy, correctness, completeness or adequacy. We recommend that individuals seek professional advice before making any financial decisions. This information is intended to assist you as part of your own advice to your client. Use of this information is your responsibility. To the maximum extent permitted by law, Accurium expressly disclaims all liabilities and responsibility in respect of any expenses, losses, damages or costs incurred by any recipient as a result of the use or reliance on the information including, without limitation, any liability arising from fault or negligence or otherwise. While all care has been taken to ensure the information is correct at the time of publishing, superannuation and tax legislation can change from time to time and Accurium is not liable for any loss arising from reliance on this information, including reliance on information that is no longer current. Tax is only one consideration when making a financial decision.