An actuarial certificate must be obtained in respect of a full income year and received ahead of finalising the annual return for that year. For most SMSFs this means the actuarial certificate is applied for after 30 June and before the SMSF annual return is due, generally the following 15 May.

However, sometimes the exempt income proportion is desired part way through an income year. For example, for a fund which is being wound up, or where interim accounts need to be prepared.

Consider, a client decides to wind up their SMSF mid-year and rollover their balance to another fund. The SMSF has a member in accumulation and another with an account-based pension. To finalise the accounts for the SMSF members you may wish to calculate the amount of exempt current pension income applicable.  To do this, an actuarial certificate would be required.

A common question we are asked in this scenario is ‘Can I request an actuarial certificate to cover part of the income year?’

The Short Answer

Yes. We can issue an actuarial certificate prior to the end of an income year but only if the fund has wound up on or before the application date. It is not possible to issue an actuarial certificate for part of an income year, an actuarial certificate must be in respect of the unsegregated assets of a fund over an entire income year. Therefore, it is not possible to issue a certificate until after the end of a year when all the information is known, unless a fund has wound up.

If the fund is winding up

If the fund has wound up, or is in the process of winding up, we can issue an actuarial certificate for that income year. In effect this covers the period from 1 July to the wind-up date. This actuarial certificate can be used to claim ECPI in the SMSF’s final tax return.

The wind-up date shown in the application form needs to be on or before the application date. We will assume that the fund is wound up and all assets withdrawn on that date. We know that in practice you may not have finalised the wind-up at the time you apply for the actuarial certificate and the fund doesn’t need to have everything completed by the wind-up date entered on the actuarial certificate application form, but it is expected that the wind up will be completed within a reasonable timeframe from the date on the application

If you need the tax-exempt proportion for internal purposes

If you wish to request an actuarial certificate to obtain an exempt income proportion covering a specific period of the income year to help allocate income, determine member balances or payout amounts, an actuarial certificate is not required for those purposes, and indeed we cannot issue one.

What we can provide is a draft exempt income proportion, and the split between members, to be used for internal purposes only.

A few things to note:

• The draft exempt income proportion provided part way through a year cannot be used to claim ECPI in the SMSF annual return for the income year.
• A signed actuarial certificate covering the full income year is required to claim ECPI in the SMSF annual return, you can apply for this after year-end.
• You only pay once. You will pay for the mid-year actuarial exempt income proportion calculation, and when you later apply for the full year actuarial certificate, we will process this as an amendment at no additional cost.

How to request a mid-year exempt income proportion calculation?

Submit an actuarial certificate application as normal, including all transactions up to the date at which you wish to have the exempt income proportion calculated. Then add a comment to the application letting us know you’d like to request a mid-year calculation up to the specific date.

What we can’t do

We can’t issue a part-year actuarial certificate for a continuing fund. For example, a certificate cannot be issued which covers only the period where a fund had a higher exempt income percentage after a pension was commenced and exclude prior periods where the fund was solely in accumulation (this would require the accumulation assets to be segregated non-current assets). The certificate must cover a full income year, unless the fund has wound up, and must include all unsegregated assets of the fund over that year.

Need a hand?

If you are unsure whether an actuarial certificate is required or you would like assistance with requesting a  mid-year calculation or certificate for a wind up, please call our SMSF team on 1800 203 123 or email us at [email protected].