The SMSF Association has issued a warning to self-managed super fund (SMSF) members in the pension phase to ensure that they have met their minimum pension payments by 30 June.
The SMSF Association’s Chief Executive Officer John Maroney noted that given all the changes underway in SMSF’s, it would be understandable if members “overlooked the compliance obligations as they relate to pension payments“.
Failure to make the minimum pension payments by 30 June could result in negative financial consequences for members including:
- the assets supporting the pension account are deemed to not be in retirement phase for the entire financial year, meaning it loses its tax exemption status and earnings;
- capital gains of the fund will be taxed at 15% (or 10% for discount capital gains); and
- in addition, members in transition-to-retirement phase should ensure that they don’t exceed the maximum payment.
With 48% of SMSF members in pension phase and this figure growing rapidly year on year, the minimum pension payment is an issue affecting many SMSF members.
Members should also take the opportunity to review their SMSF Deeds and Death Benefit nominations before 30 June to ensure they are compliant and cover the significant changes coming into force on 1 July 2017.
If you have any concerns or queries regarding your SMSF, contact us for further advice.