Fabian Bussoletti, technical manager for the SMSF Association, said a number of things have changed regarding the condition of release requirements.
These include the abolishment of the work test, non-concessional contribution bring-forward rules to age 75, catch-up concessional contributions, the indexation of contribution caps, and the downsizer to age 55.
“The majority of people are looking at transitioning their SMSF into pension phase between the ages of 60 and 65, and they must meet the conditions of release, because without that they are unlikely to be able to commence an income stream,” he said.
“It’s also worth noting that if you have clients who are Centrelink sensitive, and that could include either the client themselves or their partner, any assets that they hold in the accumulation phase are exempt from the Centrelink means testing regime.”
However, he said small business SMSFs also need to be aware of the small business capital gains tax, and while there are some similarities to the retirement condition of release, he emphasised they are different.
“The 15-year concession gives you the 100 per cent CGT exemption, and it requires that the disposal of the asset happens in connection with an individual’s retirement, and that the individual has to be 55 or older,” he said.
“There are a couple of things that come out of that, and firstly, it is that 55 is not the preservation age. The small business possessions don’t link to preservation age. They’re linked to the age of 55. The other part is that you don’t have to be retired to get the 15-year concession. It just has to be in connection with that person’s retirement, and in connection with is very different to the retirement condition that we need to meet under the SIS Act.”
Bussoletti added that there is also another concession linked to the retirement exemption for small businesses.
“It is called retirement exemption, but there is no requirement to meet the eligibility criteria for that one, but there is a linkage back to age 55 again,” he said.
“That is not necessarily the eligibility link, but rather, it’s a link to whether or not you have to make a contribution to super to avail yourself of that concession.”
Good reminder