Actuarial certificate requirements in line for significant shake-up

Mr Burgess said paragraph 3.337 of the explanatory memorandum for the Superannuation (Excess Transfer Balance Tax) Imposition Bill 2016 states:

“A regulation will be made for the purposes of subsection 295 390(7) to determine liabilities in respect of account-based income stream benefits for the proportionate method. This means that superannuation funds who use the proportionate method but whose only superannuation income stream benefit liabilities arise from account-based superannuation income stream products will also not be required to obtain an actuary’s certificate for the purpose of determining their exempt current pension income.”

Under current law, Mr Burgess said that if a super fund is unsegregated, they do need to obtain an actuarial certificate to determine what portion of the fund’s earnings are exempt from tax.

“From what we can see, and I’ll stress that we do need to see the regulations, it looks as if funds won’t require an actuarial certificate if they’ve got an account-based pension, even if they’re unsegregated,” he said.

One of the big drivers for this is the fact that from 1 July 2017, SMSFs with pension balances in excess of 1.6 million won’t be able to use the segregated approach by claiming exempt current pension income.

“With that change under the previous drafts you could have a situation where the fund was totally in the pension phase, but still required to use an actuarial certificate which was quite a bizarre outcome,” Mr Burgess said.

“So not needing to get an actuarial certificate would address that situation so it may help to facilitate SMSFs wanting to segregate their assets by having more than one fund.”