Putting SMSF pensions to the (lie detector) test – An interrogation of the rules

National Conference 2022

Since 1 July 2017, there have been changes that impact the calculation of exempt current pension income (ECPI), including the ATO publishing their view on the workings of ECPI calculations. The ATO’s view varies significantly from historic practices and led the Government to announce in the 2019 Federal Budget that they would allow SMSFs to choose between the two methods of calculating ECPI. The Government has also announced an amnesty to allow legacy pensions to be commuted.

In this workshop we will use a series of case studies to review:

• The proposed legislation and the who, how and when of SMSFs eligible to make a choice;
• How the different calculation methods impact the value of ECPI and which method should you choose;
• The treatment of deductions where a fund has ECPI;
• The consequences and remedies of pensions failing the pension standards, and;
• Current issues in dealing with legacy pensions, including the 2020 MYEFO announcements and the proposed 2 year amnesty.

At the end of this session, you will be able to:

• Identify clients impacted by the different ECPI calculation methods;
• Demonstrate how the timing of events impacts ECPI calculations;
• Understand how deductions impact ECPI calculations;
• Review the pension payment standards and understand the options if things go wrong, and;
• Identify issues impacting clients with legacy pensions.