Treasury proposes fix for reversionary TRIS headaches
Treasury has released draft legislation to address some of the administrative difficulties surrounding reversionary TRISs where beneficiaries have not met a condition of release.
Under the current rules, a TRIS cannot automatically revert to a dependant where the dependant has not met a condition of release, Treasury explained in a public statement. This has resulted in administrative difficulties for funds and has the potential to cause adverse estate planning outcomes in some cases, as reported by SMSF Adviser previously.
Following extensive lobbying from the industry on the issue, the government has now released exposure draft legislation to enable a TRIS to automatically transfer to eligible dependants upon the death of the primary recipient. You can access the draft legislation here.
The explanatory materials state that the amendments modify the rules that determine when a TRIS is in the retirement phase to ensure that a reversionary TRIS can always be paid to a reversionary beneficiary.
“The change will allow the original TRIS to be paid to the dependant beneficiary rather than having to be commuted and a new income stream started from the deceased member’s underlying superannuation interests,” the explanatory materials said.
“This approach is consistent with the treatment of other superannuation income streams, which do not require the reversionary beneficiary to satisfy a condition of release.”
Minister for Revenue and Financial Services Kelly O’Dwyer said allowing a TRIS to automatically revert in all cases will simplify administrative processes for superannuation funds.
“It will also make it easier for superannuation members by eliminating the need for recently bereaved dependants to quickly engage with the super affairs at what is a particularly difficult time,” Ms O’Dwyer said.
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.