Draft pensions ruling leaves uncertainty: SPAA
The SMSF Professionals' Association of Australia (SPAA) has urged the Australian Taxation Office to release the final tax ruling on when a superannuation income stream commences and ends.
It has been over a year since the Government released its draft pensions ruling (TR 2011/D3), which SPAA said leaves open "a Pandora's box on when a pension stops and starts".
According to SPAA director, education and professional standards Graeme Colley, the ongoing negotiations involving the ruling have not benefited those affected by the rule and a final version needed to be published as soon as possible.
SPAA added that clarification was needed on:
· the date of effect of the ruling;
· commutation of the super income stream and the different treatment of current pension assets in the case of full or partial commutation;
· notification of when a pension starts;
· the implications of pension entitlements on the death of a primary or revisionary pensioner, as well as issues surrounding the notification of a pensioner's death; and
· the implications surrounding breaches of the preservation rules if the income stream does not meet the requirements of the Superannuation Industry (Supervision) (SIS) Act.
Colley said it was critical for SMSFs to consider the impact of the SIS Act's definition of an account-based pension.
"Also, there are a number of minimum requirements to be met by a super income stream to ensure any income and capital gains on investments used to support the pension remains tax free," he said.
Determining the cessation date of pension income was also important, because in many cases notification may not occur until well after the member's death, he added.
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