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ATO stresses position on actuarial certificates ahead of EOFY
The ATO has stressed that funds that move from being segregated to unsegregated on 30 June 2017 need to obtain an actuarial certificate for the single day that it was unsegregated.
Despite industry flagging some practical concerns with the requirement for funds in this position to obtain an actuarial certificate for the one day of income if they want to claim exempt current pension income (ECPI), the tax office, at this stage, looks unlikely to budge on the requirement.
In an ATO webinar, ATO director of technical leadership Helen Morgan pointed out that the need to obtain an actuarial certificate is not a regulatory requirement under superannuation law, but it is an income tax requirement.
“Accordingly, a fund in this situation would only need to obtain such a certificate if they were to earn income on that day and made a financial decision that it was worthwhile obtaining a certificate in order to claim the ECPI in relation to the income earned on that day,” Ms Morgan said.
“For example, if a fund had a small amount of income, on 30 June 2017, the day they switched from being segregated to being unsegregated, the fund may decide that the amount of income earned on that day that they have to pay tax on is very small compared to the cost of obtaining an actuarial certificate.”
In this case, Ms Morgan said the fund may decide to just pay the tax on the income earned that day.
“Of course, the opposite could be true and the fund could have a large amount of income earned on that day, and it could be in the trustee’s interests to obtain an actuarial certificate for that day.”
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
Yet again the ATO proves how bloody-mindedly stupid it can be when administering "the law". Or perhaps the decision-maker's brother-in-law is an actuary. A Government unfit for office ( complemented by an Opposition that is no better), and a bureaucracy that has no idea what goes on in the real world - no wonder this country is such a mess!0- a ridiculous decision showing the ATO has no sense of reality. I thought red tape was to be reduced?0
- How little income is "little income" assuming the cost of an actuarial certificate is ca. $200. Considering that most trusts and managed investments will declare income at 30 June. Not to mention if we're looking at clients who can no longer use segregation a large portion thereof will have some kind of trust investment.0
- WHAT IF THE SMSF MOVES TO ACCUMULATION PHASE AT THE CLOSE OF BUSINESS ON 30/06/2017 , FOR THE EXCESS OVER $1.6 M ?SURELY AN ACTUARY CERTIFICATE IS NOT NEEDED.0
- Yes, we are talking about Tax Law and, doesn't s 295-390 (4) and then (6) prescribe when an Actuarial Certificate is required????
I wait with anticipation for the Actuary's representation on this matter.0 - Well this clearly shows how stupid the need for actuarial certificates that are produced over the internet with no human intervention are. What about if you moved from segregated to unsegregated at 11.59pm?0
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