Speaking in a recent webinar, Kath Bowler from Licensing for Accountants and Aaron Dunn from Smarter SMSF reminded practitioners that when engaging with SMSF clients, certain events need to be dealt with on a prospective basis.
SMSF practitioners have been warned previously about some of the dangers of retrospectively documenting the partial commutation of a pension after payments have occurred as the law requires SMSFs to have these documents in place before the payment is made.
In the past, some accountants would prepare this documentation when they did the tax return for the SMSF and state that the trustee had requested the payment be made as a lump sum instead of a pension.
While the law hasn’t actually changed around this, the introduction of the events-based reporting means it is more difficult to change documentation after the payments have occurred and could create a red flag, David Moss from Merit Wealth explained previously.
Ms Bowler said she has already seen quite a few practitioners encounter some difficulties around 30 June this year, because they were trying to be retrospective and ran into issues.
Speaking to SMSF Adviser, Ms Bowler said there are tax advantages in only taking minimum pensions and sourcing additional income needs through lump sum withdrawals.
Normally, the accountant would provide guidance around that at the end of the year once the money has already been taken out. [However,] that guidance needs to be provided before the event happens, she explained.
“It wasn’t really possible before [either], but with the amount of documentation that exists now, it is just really shining a spotlight on where backdating did occur,” she said.
They certainly do know and have planned it this way to hit the SMSF sector as hard as they can in every avenue possible.
We the industry have worked hard to administor SMSF’s within the complex laws set but the Govt has deliberately gone after us.
Very worrying times and has very dirty unter tones which will eventually come out to bite us all in time. But Scrot Morrison won’t worry sitting back on his highly overpaid public funded pension. I voted him in and I WILL vote him out as the most deceitful snaky untrustworthy individuals the parliament has seen.
It’s all good and well to talk of ” only taking minimum pensions and sourcing additional income needs through lump sum withdrawals” but what about the additional SMSF accounting costs as every lump sum commutation needs a set of interim SMSF accounts done.
It’s a wonderfully Over Complicated and costly system ODwyer and her Treasury buffoons have created. They have no idea of the masses of over complication they have made as they brought in the changes without consulting the industry. ODwyer utter arrogance at it’s best.
I am not an accountant so Can I ask why you would need to do a set of interim accounts to do a lump sum commutation from a pension account that has a set taxable/tax free component.