ATO sheds further light on TRIS conversion
The ATO has further outlined the circumstances in which the tax treatment of a transition to retirement income stream will be converted to that of an account-based pension, and the date it will apply from.
ATO director of technical leadership Helen Morgan says from a transfer balance cap perspective, transition to retirement income streams are specifically excluded from being in the retirement phase and, therefore, do not affect the transfer balance cap.
However, Ms Morgan said on the 25 May 2017, the government introduced a bill into Parliament that proposed an amendment to the TRIS rules.
“Under the proposed changes to the law, after 1 July, if you’re in receipt of a TRIS and you reach age 65, your TRIS will automatically be treated as being in the retirement phase,” she explained.
“A transfer balance account will be created for you with a credit allocated at the value of the remaining entitlement from your TRIS.”
Ms Morgan clarified that if a member is younger than 65 and they have satisfied another condition of release such as retirement, a terminal medical condition or permanent incapacity, it won’t be converted into an account-based pension until they advise their superannuation income stream provider.
“Your TRIS will then be in the retirement phase. A transfer balance account will be created and credited with the value of your remaining TRIS entitlement,” she said.
Ms Morgan also confirmed that the credit with the remaining value of the TRIS will be applied on the date that the member notifies the fund that they have satisfied a condition of release.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.