Speaking to SMSF Adviser, owner of Miller Super Solutions and former Cavendish head of education Tim Miller said while the ATO has very clearly defined the penalties and rules associated with pension payments from account-based pensions, the guidance provided around TRIS payments could leave trustees confused.
According to Mr Miller, the ATO has not, for example, stated explicitly whether the trustee will have to commence a new TRIS if they make a payment outside the allowable limits, similar to when trustees make incorrect payments from an account-based pension.
“[The ATO] have certainly made it clear in the situation of an account-based pension, but generally what they’ve done in the past is highlight issues associated with account-based pensions and have gone to the point of identifying whether it applies to a transition to retirement income stream,” he said.
“In a question posted on their website exclusively about whether or not a TRIS payment exceeds the maximum, they’ve given a two-paragraph answer, but it probably warrants a little further clarification.”
Based on the information provided by the ATO, Mr Miller said he would conclude the trustee would need to commence a new TRIS if they made an overpayment – but a trustee may not realise that, he added.
“Effectively what it might do is give people the scope to say, ‘you know what, I don’t care if I’m only taxed at the marginal tax rate, it gives me a way to access my superannuation money over and above what I’m allowed to do’,” he said.
“Now that’s not what the ATO is actually saying, but they don’t really clarify it in their Q&A on their website.”
The tax office also needs to discuss in full the ramifications of going over the maximum and whether there is some sliding form of penalty, said Mr Miller, “if the trustee goes over by a dollar versus going over by tens of thousands of dollars”.
“Is there any flexibility to rectify the situation or is it just a matter of taking a hit and taking your tax penalty and [being told] don’t do it again?” he said.
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I think it’s worth noting that a transition to retirement income stream is a type of account based pension, so theoretically any guidance about ABPs generally will encapsulate TRIS, unless something more specific is released.
It’s illegal access and would probably see the Tax Office wheel out some of it’s newly minted admin penalties, for a start. In this digital age, there is no excuse for these types of mistakes.