The Tax Office has released an SMSF News Alert outlining the circumstances in which the Commissioner will exercise his powers of general administration to allow a superannuation income stream to continue, even though it has not met the minimum pension standards in the SIS Regulations. To this end, the Tax Office has published, Self-managed super funds – starting and stopping a superannuation income stream (pension), to highlight the conditions that must be satisfied to allow a trustee of an SMSF to continue to claim exempt current pension income (ECPI). The document also outlines the circumstances under which the Commissioner will allow the trustee of an SMSF to self-assess an entitlement under this administrative concession.
Generally, if an SMSF fails to meet the minimum pension payment requirements for an account-based pension in an income year, the Tax Office says the super income stream will have been taken to have ceased at the start of that income year for income tax purposes. As such, any payments made during the year would generally be treated as super lump sums for both tax and SIS Regulations purposes.
However, the Commissioner states that he will use his powers of general administration to allow a fund to treat a pension as continuing, despite a breach of the minimum pension payment rules, where certain conditions are satisfied.
The Tax Office also issued a separate document for APRA-regulated funds – starting and stopping a superannuation income stream (pension).
[LTN 16, 24/1/13]