‘Critical 24 hours’: ATO issues EOFY alert
With only one day of the 2014/2015 financial year left, the ATO has issued a reminder urging trustees to ensure they have met their pension requirements, and has expressed concern regarding a “significant change” that many are likely still unaware of.
Speaking to SMSF Adviser, an ATO spokesperson reminded practitioners and their trustee clients there is “little time left” for SMSFs to make their members' minimum pension payments.
“Failure to do so puts at risk exempt current pension income, or better put, they could lose their effective 0 per cent tax rate on income supporting their member’s pensions and pay the Commonwealth 15 per cent on their income,” the spokesperson said.
Managing director of The SMSF Academy, Aaron Dunn, also stressed it is “critical” that trustees and members ensure that the minimum pension obligations are met.
“With very limited circumstances available for a pension to continue when the minimum pension has not been met (e.g. using the Commissioner’s General Powers of Administration where amount is less than 1/12th), failure to not comply with the pension rules may not only mean a loss of tax exemption, but potential flow-on effects with Centrelink entitlements and estate planning strategies that may have been implemented,” Mr Dunn said.
Similarly, the SMSF Association’s Graeme Colley told SMSF Adviser that if trustees “get their act together” they can start a pension from as late as today.
The ATO spokesperson also stressed that from tomorrow, the preservation age will increase from 55 to 56.
“Most websites and seminars talk about age 55, so it’s likely some people will miss this significant change especially since it was legislated way back in 1998,” the spokesperson said.
Mr Colley also noted that while making contributions within a short period is possible, payments using Billpay or that require posting will not make deadline.
Click here for more on end-of-financial-year obligations for SMSFs.
