SMSFs reminded on pension payment deadline for EOFY
With 30 June landing on a Sunday this year, an SMSF services provider has warned SMSFs planning to pay their minimum pension payment by electronic transfer not too leave it too late.
In an online article, Heffron SMSF Solutions managing director Meg Heffron said that, as the end of the financial year draws closer, SMSF clients with pensions will be checking the amounts paid from their fund so far to ensure the minimum payment requirements are met.
Some clients who only take payments right at the end of the year, Ms Heffron said, will need to double-check the amount that needs to be paid from their fund and make sure it all happens before midnight of 30 June 2019.
One of the common questions from clients at this time of the year, she said, is when an electronic transfer from an SMSF bank account is considered to be paid.
“As a general rule, a pension is only considered to be paid by electronic funds transfer (EFT) when the money appears in the recipient’s bank account,” Ms Heffron explained.
“Given that 30 June is a Sunday this year, leaving it to the last minute will generally be too late. Even transfers arranged on Friday, 28 June, might cause problems — it’s likely that the money won’t appear in the member’s bank account until at least Monday, 1 July, and possibly even later.”
For SMSF clients that do forget to make their pension payments until the last weekend of June, there is still the option of using a cheque to make the payment on time, she reassured.
“For a pension to be paid by cheque, the trustee simply needs to ensure that a cheque dated 30 June or earlier is in the hands of the member before midnight, there is enough money in the fund’s bank account to cover it and the cheque is presented promptly by the member,” she explained.
“It’s a strange back-to-the-future outcome — how many people actually use cheques these days? But again, the argument is that, once a member has a valid cheque in their hands, they have control of the money.”
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.