SMSF exempt current pension income

The ATO is focusing on exempt current pension income as more superannuation funds are moving towards pension phase. In ATO ID 2012/47 attention has been drawn to the fact that many superannuation funds may be under claiming the level of tax deductions they may be entitled to. Further background TR 93/17 deals with income tax deductions available to super funds, general admin expenses relevant to the operation of the fund and if they should be apportioned due to members being in accumulation phase and pension phase.

Case Study

Tom (57) and Mary (54) are members of ICE Super Fund. During the 2011/2012 year the following events take place:

  1. Rollover of $465,000. Concessional contributions of $46,000, Non concessional contributions of $170,000, fund investment income $39,000, general expenses $4,800.
  2. During the year Tom commence a TRIS, year end an actuarial certificate was obtained with a tax exempt base of 58%

Under ATO ID 2012/47 the fund will be entitled to a tax deduction of $4,650

$4,800 * ($720,000 – $22,620)/ $720,000

It has been discovered some funds were not including the non assessable contributions in claiming the tax deduction where a level of exemption applies. If this was the case for ICE Super Fund a lower tax deduction of $3,523 would have been claimed $4,800 * ($85,000 – $22,620)/85,000

AS AUDITORS OF SMSF THESE ARE ITEMS WE REVIEW. Our audits of self managed superannuation fund start from $300.

DISCLAIMER: The above is general advice only, you should not act on this advice without consulting a professional adviser to discuss your personal circumstances.