In an ATO webinar, ATO director of technical leadership Helen Morgan said where a fund’s only superannuation interests are account-based pensions, the fund’s assets will all meet the definition for segregated current pension assets, since the fund is holding them solely to support those pensions.
If a fund makes a contribution into the fund, however, it will have an accumulation interest and the fund will move out of the segregated method.
“That could result from a member returning to the workforce for a short period of time and they’re still eligible to make contributions or where they have come into an entitlement or a position where they can now make a contribution again without exceeding their caps,” Ms Morgan explained.
However, this has caused some confusion about the date the CGT relief would apply where a fund makes a contribution and stops being segregated but plans to commute the excess amounts above the $1.6 million into accumulation at a later point in the financial year.
“The relevant date for CGT relief is where a fund switches from the segregated method to the proportionate method and the relevant date in that instance is the date where the assets cease being segregated current pension assets,” Ms Morgan said.
This means the SMSF trustee would reset the cost base on all the eligible assets for CGT relief at the time the contribution was made.
“This is provided that the member does comply with the transfer balance cap or TRIS reforms. It’s not sufficient just to be currently segregated, and make a contribution to the fund and not have to do anything in order to comply with the superannuation reforms going forward,” Ms Morgan said.
This is too superficial and just adds to the grey noise out there re Super Reforms. Thank you ATO.
A segregated fund can remain segregated even after a contribution as the contribution goes into the non-current asset pool. The trustee could coincide the election to unsegregate at the point of the contribution but they don’t have to. They can wait until 30 June to do that.
Once a fund becomes unsegregated, all assets held throughout the pre-commencement period are eligible for cost base reset using the segregated method for tax calculation.
Plain English will help ensure that the messaging is understood.
Fund fully segregated on 1st July 2016 and and a member makes a non-concessional contribution and immediiately (same day) commences a new pension with the full amount such that no amount remains behind in accumulation actuaries in past have signed off that the fund maintians 100% exempt status on basis there has not been a day where fund is in accumulation especially as ATO attitude has always been that a day that a pension commences (and cease) are pension days and not accumulation days.
Am I correct in assuming this approach continues with respect to when segragation ceases for CGT relief, that is, the making of the non-concessional contribution under such circumstances does not result in segragation ceasing and hence can choose a future date between date of contribution and 30th June 2017 to cease segregation?