Underutilised strategy pinpointed for pension assets
Segregating high-growth assets into pension phase for accounting purposes can be an effective way of decreasing the taxable proportion, says a technical expert.
Insyt director Darren Wynen said that investment segregation can be a useful strategy for SMSFs that can achieve some savings.
“The idea is to segregate high-growth assets into pension phase for accounting purposes. As we know, the increase in value doesn’t count towards the transfer balance account,” Mr Wynen explained.
“The theory is that, over time, the taxable proportion as determined by the actuary will decrease as those assets grow in value.”
The ATO has given this strategy the green light, he said, as it’s allowed under the regulations.
“We’re not segregating for tax, the segregation is happening on the accounting level, not the tax level, but over the years, it will have an impact on what the actuary determines the proportion to be,” Mr Wynen said.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.