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Restructuring market-linked pensions (MLPs) – the wait for a commutation authority continues

By Mary Simmons, Head of Technical SMSFA
June 23 2023
1 minute read
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The ATO has updated its website to reset the expectations of taxpayers who have restructured a MLP and are waiting on a commutation authority to be issued before they can remove any excess transfer balance amount (QC 72887).

The ATO’s web content makes it abundantly clear an SMSF trustee cannot commute any of the capital supporting the restructured MLP until a commutation authority has been issued by the Commissioner.

This means a member must wait for at least 60 days to pass from when they are issued with an excess transfer balance determination. This legislated 60-day election period cannot be shortened.


In our experience, a member should then expect to wait at least another 28 days for the ATO to issue a commutation authority.

Sometimes the wait can be even longer. In several cases that we at the SMSFA have seen, members are still waiting 100 days after they were issued with an excess transfer balance determination.

Unfortunately, every day during this waiting period, the member is accumulating additional excess transfer balance tax. Every day, SMSFs are faced with the conflict of knowing that waiting may not be in the best financial interest of their beneficiaries. And, every day, member choice is on hold and the opportunity cost for those that wish to take the excess amount as a lump sum commutation continues to grow.

It could prove even costlier for members who have restructured their MLP with the intention of removing the excess from superannuation but sadly pass away before the commutation authority is issued. Such situations are likely to reignite the debate over member benefit versus death benefit with the potential for death benefit taxes to erode even further, the now deceased member’s benefit.

The SMSFA continues to impress upon the Commissioner the importance of finding an administrative solution that allows a member to commute an excess from a restructured MLP as soon as legally possible. Our discussions are ongoing, and we will continue to update you.

In the meantime, as the end of the 88-day period approaches, we strongly encourage you to contact the ATO. Tax agents are best to call 13 72 86 and clients should be advised to lodge a complaint with the ATO by calling 1800 199 010.

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