COMPLIANCE
Failed pensions – the next chapter
The update to Taxation Ruling 2013/5 means trustees are faced with a range of decisions and issues to deal with if they fail to meet the minimum pension payment requirement. Lyn Formica explores some of the dilemmas they now face.
LYN FORMICA is head of education and content at Heffron.
In Issue 50 of selfmanagedsuper, Craig Day wrote an excellent article on the dilemma facing trustees, accountants and advisers when an SMSF fails to meet the minimum pension requirements. As so often happens, there was even more to say than Craig’s word limit would allow. So I thought I would pick up where he left off and explore some of these issues in more detail, adding the SMSF administrator’s flavour. A quick recap first The industry’s bible for dealing with pension underpayments has been a taxation ruling
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(TR) first issued by the ATO back in 2013 – TR 2013/5. This was the ruling that for the first time presented the ATO’s views on when pensions start and stop. It also specifically enshrined the concept funds failing to pay the minimum amount required from an account-based pension during a particular year would cause that pension to stop, for tax purposes, from the start of that financial year. Importantly, that meant no exempt current pension income (ECPI) – the magical tax break Continued on next page
