Positive changes for SMSF sector in Budget
The SMSF Association has welcomed the Government’s proposed changes regarding calculating exempt current pension income (ECPI) and increasing the age where the work test for making contributions to superannuation applies.
The Association’s chief executive, John Maroney, said that streamlining administrative requirements to calculate ECPI was a decision the Association advocated in its budget submission as a way to reduce red tape.
Changes were expected to be made to allow superannuation fund trustees with interests in both the accumulation and retirement phases during an income year to choose their preferred method of calculating ECPI.
“Currently, the ATO requires them to use both the proportionate method and segregated method for relevant parts of an income year, and this can be unnecessarily complex. This change allows prior industry practice of using the proportionate method and calculating ECPI through an actuarial certificate to begin again,” Maroney said.
“The Government will also remove the requirement for superannuation funds to obtain an actuarial certificate when calculating ECPI using the proportionate method where all members of the fund are fully in the retirement phase for the entire income year.”
From 1 July 2020, the government would increase the work test age to 67 to be aligned with the pension age which was another positive change, according to the Association.
According to Maroney, the Government’s decision to leave superannuation alone in this budget would be welcomed by the self-managed superannuation fund (SMSF) sector.
“Many SMSF trustees and their advisers are still experiencing the compliance impacts of the 2016 Budget changes that began on 1 July 2017, so the fact there are no more major changes in the pipeline is extremely positive,” he said.
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