SuperConcepts general manager of technical services and education Peter Burgess said the explanatory memorandum accompanying the bill which gave effect to the super reforms in 2016, stated that a regulation would be made to help eliminate scenarios where SMSFs where required to obtain actuarial certificates unnecessarily.
The explanatory memorandum stated that a regulation would 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 not be required to obtain an actuary’s certificate for the purpose of determining their exempt current pension income,” the explanatory memorandum states.
Mr Burgess explained that this regulation has not been made, and as a result, SMSFs — who only have assets supporting account-based pensions but the member has a total super balance in excess of $1.6 million — are now required to obtain an actuarial certificate.
“This could occur for example because the member’s pension balance in their SMSF together with an accumulation balance they held in another fund exceeded $1.6 million as at 30 June 2017,” said Mr Burgess.
“In this situation, the SMSF would be required to obtain an actuarial certificate before the fund could lodge its 2017-18 annual return despite the fact that all the assets in the fund are supporting the payment of a pension.”
Mr Burgess said it is difficult to explain to clients that their SMSF requires an actuarial certificate just to confirm that all the fund’s income is exempt from tax when all the assets of their fund are supporting pensions.
I raised the same issue with Tony Negline (CAANZ Superannuation leader). I was asking if the CAs were going to push for this to be corrected (put back to a fund level assessment) as it could result in big problems where people unknowingly have over $1.6m and no actuarial certificate is obtained – the full ECPI claim would be lost then. The impression I got from him was that he didn’t see this as being a big deal.
thanks miranda. – it’s about time someone called out the ATO on such ‘accidental’ omissions but the real reason behind actuarial certificates is to move the responsibility for ECPI determination from the ATO to actuaries. just imagine how much work (and responsibility) this removes from the ATO — not to mention the fees to flow to acturies. this sounds like ASIC / bank relationships all over again