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ATO eyeing lump sum withdrawals, mid-tier warns

ATO eyeing lump sum withdrawals, mid-tier warns

pension annuity
Miranda Brownlee
10 March 2016 — 1 minute read

While there may be incentives for SMSFs to withdraw their transition to retirement income streams as tax-free lump sums, SMSF practitioners and trustees need to be careful they are not pushing the boundaries with the ATO, says a mid-tier firm.

BDO superannuation partner, private client division, Mark Wilkinson said transitional pensions, for the current financial year, are still tax-free, so SMSF trustees potentially have the capacity to withdraw their pension as a tax-free lump sum.

“So certainly in the lead up to 30 June, you might actually have people who are commencing pensions because of the tax treatment of their income stream for this financial year,” said Mr Wilkinson.


“The fact that you’re actually potentially able to structure some of your pension payments as tax-free lump sums might provide an incentive to actually commence pensions this year, but you do need to be careful.”

Mr Wilkinson noted that the Tax Office has made certain statements with regard to income tax integrity and the application of Part 4A.

These comments he said have mainly been made in relation to "tax payers and fund members utilising schemes to bring themselves within the CGT relief where they would not otherwise be able to do so," he said. "So you do need to be careful". 

ATO eyeing lump sum withdrawals, mid-tier warns
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