Amendments have recently passed that mean self-managed super funds (SMSFs) that are fully in retirement phase for all the income year, with disregarded small fund assets, will not be required to obtain an actuarial certificate for their 2022 SMSF Annual Return and later income years.

“An actuarial certificate is still required for funds where it is possible that at any time during the income year, assets and earnings are greater than the estimated liabilities, even if all members are fully in retirement phase. This is commonly seen in legacy (non-account based) pensions,” the ATO said. 

“Approved SMSF auditors should familiarise themselves with the law changes in readiness for carrying out the annual compliance and financial audit of an SMSF for the 2021-22 income year, as funds that may have been previously required to obtain an actuarial certificate may now be exempt.”

“Self-managed super funds (SMSFs) who were fully in retirement phase and only paying account-based pensions will not be required to obtain an actuarial certificate for their 2022 SMSF Annual Return.”

Previously, SMSFs with disregarded small fund assets were required to use the proportionate method and obtain an actuarial certificate, even when all their members were fully in retirement phase for the entire income year.

The amendments operate so SMSFs fully in retirement phase for the entire income year are exempt from the definition of “disregarded small fund assets”, and therefore not excluded from being “segregated current pension assets”, under the Income Tax Assessment Act 1997, and as a result, these funds can use the segregated method for calculating exempt current pension income (ECPI), which does not require an actuarial certificate.