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.

The contents of this resource are taken to be correct at the time of publication.

Disclaimer: Technical Papers contain general advice only and are prepared without taking into account particular objectives, financial circumstances and needs. The information provided is not a substitute for legal, tax and financial product advice. Before making any decision based on this information, you should assess its relevance to the individual circumstances of your client. While the SMSF Association believes that the information provided is accurate, no warranty is given as to its accuracy and persons who rely on this information do so at their own risk. The information provided in this bulletin is not considered financial product advice for the purposes of the Corporations Act 2001. © SMSF Association