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  • Exempt current pension income measure

    As announced in the 2019-20 Federal Budget, superannuation funds will be able to choose their preferred method of calculating exempt current pension income (ECPI) in certain circumstances. These changes will reduce the administrative burden and associated costs for trusteesExternal Link. The Treasury Laws Amendment (Enhancing Superannuation Outcomes for Australians and Helping Australian Businesses Invest) Bill 2021External Link is now law.

    Included is a change in the law to how some funds calculate their Exempt Current Pension Income (ECPI). The law start date is 1 April 2022 and will apply to assessments for the 2021-22 and later income years.

    Superannuation trustees that hold all fund assets in retirement phase for part, but not all of the income year, can now choose to treat the assets as not being segregated current pension assets for that period. Funds who make this choice will be able to use the proportionate method for calculating exempt current pension income (ECPI).

    Previously, trustees were required to use the segregated method when a fund was fully in retirement phase at any time of the income year. When a fund had members in both retirement phase and accumulation phase for part of the income year, and only retirement phase for another part of the income year, trustees may have been required to use both the proportionate and segregated methods to calculate ECPI.

    The new law allows superannuation trustees in these circumstances to now choose to treat their assets as not being segregated current pension assets. The fund is then able to use the proportionate method when calculating all of their ECPI for the income year.

    This change does not affect funds that only pay retirement phase pensions and only have segregated current pension assets at all times in an income year. Such funds will be required to continue to use the segregated method to calculate ECPI. The change also does not affect funds with disregarded small fund assets, who will be required to continue to use the proportionate method to calculate the fund’s ECPI.

      Last modified: 25 Feb 2022QC 67280