SPAA welcomes reversionary pension changes
The SMSF Professionals' Association of Australia (SPAA) has welcomed the impact of changes to the tax treatment of reversionary pensions after the pensioner dies.
Commenting on the changes, SPAA technical and professional standards director, Graeme Colley said the changes would have far-reaching effects for self-managed superannuation funds (SMSFs).
"The changes to the super law to allow the tax exemption to continue on the income from investments after the death of a non-reversionary pensioner until a lump sum has been paid or a new pension begins is a positive outcome for trustees," he said.
Colley said the change meant it was now possible to sell investment supporting a non-reversionary pension tax-free after the pensioner's death, and before it was paid to beneficiaries as a lump sum or before a new pension begins.
"These investments continue to be treated as remaining in pension phase, although the pension payable to the deceased has ceased, and during the time the trustees are working out who should receive the superannuation death benefit proceeds," he said.
Colley pointed out that another change to the rules for non-reversionary pensions was the calculation of the taxable and tax-free components.
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