Following the release of Taxation Ruling TR 2013/5 (see last month), the Tax Office, on Wed 31.7.2013, issued an SMSF Alert (and a SuperUpdate Alert) to flag key concessions not mentioned in the final ruling about starting and stopping a superannuation income stream.
If a fund fails to meet the pension rules in an income year, TR 2013/5 states that the pension will have been taken to have ceased at the start of that income year. The Tax Office has now issued Alerts to flag that there are limited circumstances in which the Commissioner will exercise his powers of general administration (GPA) to allow a pension to continue despite a failure to pay the minimum pension amounts for an income year: see Tax Office document, Self-managed super funds – starting and stopping a superannuation income stream (pension). This concession is not mentioned in TR 2013/5.
The Ruling also states that a pension ceases as soon as a member in receipt of the pension dies, unless a dependant beneficiary is automatically entitled to a reversionary pension. However, the Ruling does not refer to the recent legislative amendments that seek to ensure that where a member was receiving a pension immediately before their death from 1 July 2012, the fund will continue to be entitled to apply the exempt current pension income (ECPI) provisions until the death benefits are cashed.
[LTN 147, 1/8/13]