Self Managed Superannuation Fund (SMSF) trustees appear to be equally affected by an Australian Taxation Office (ATO) draft ruling impacting superannuation income streams.
That is one of the conclusions drawn in an Association of Superannuation Funds of Australia submission to the ATO raising key issues with respect to the draft ruling, including arguing that superannuation income streams do not cease where there is no longer a member.
"There is an argument that, on the death of a member, a superannuation income stream still exists, depending on the terms of the trust deed," the submission said. "It is extremely likely that a final pension payment will need to be made after the date of death, representing the pro-rata pension payment liability which had accrued between the past pension payment and the date of death.
"Once the beneficiary or beneficiaries have been determined, this can result in a total or partial commutation of the pension to pay a lump sum, a total or partial commutation of the pension to commence another income stream, or a total or partial continuation of the same pension," it said.
The ASFA submission said it was important to note that with Australian Prudential Regulation Authority regulated funds – and sometimes even with some SMSFs – the trustee might not be aware of the death of the pensioner until some time after it had occurred.
It said that, on occasion, this might occur after year-end, and even after the accounts have been finalised and audited and the tax return for the previous year has been submitted.
