COMPLIANCE
Status and strategy interaction
It is not uncommon for members to have both an accumulation and pension account as a result of a contribution, but what will the ECPI impact be should the new monies be initially allocated to a reserve. Anthony Cullen examines the proper management of this scenario.
ANTHONY CULLEN is senior SMSF educator at Accurium.
With the preparation of 2022/23 financial accounts and SMSF annual returns in full swing, we have responded to a number of queries recently in relation to whether an actuarial certificate will be required where an SMSF is using a contribution reserving strategy. A common theme to the questions is that the relevant funds have generally had some form of segregation being applied prior to the contribution being received. If not for the contribution, it is likely the segregated method of claiming exempt current pension income (ECPI) would be available to the fund. Contribution reserving strategy The name itself for this strategy is a misnomer as the ATO has confirmed setting aside contributions prior to allocating them to a member is not a reserve by its definition. It is more akin to having the amount in a
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holding or suspense account. The strategy is made possible due to the provisions of Superannuation Industry (Supervision) (SIS) regulation 7.08, which requires contributions made to an SMSF to be allocated to a member no later than 28 days after the end of the month in which the contribution is received. It is worth noting this is unique to SMSFs. Australian Prudential Regulation Authority-regulated funds are required to allocate certain contributions no later than three business days after both the contribution and relevant information have been received by the fund trustee. Generally these will be contributions made by an employer via SuperStream. For contributions received by an SMSF in June, it Continued on next page
