What are the requirements for claiming the tax exemption?
If you want to claim a tax exemption on the SMSF's income whilst paying a super income stream benefit, you may need an actuarial certificate. This will also help you to calculate the amount of ECPI you can claim.
SMSFs using the unsegregated assets method will need an actuarial certificate for each year they claim ECPI, regardless of the type of super income stream benefit being paid.
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Where all SMSF fund members are receiving a pension, for the entire year of income and the combined account balances of these pensions is equal to the market value of the fund's total assets, in effect all assets of the fund will meet the requirement of being 'segregated' as they have the sole purpose of paying super income stream benefits. In this situation, the ATO will accept that the SMSF is not required to identify individual assets as being dedicated to funding a super income stream benefit.
You will not need to obtain an actuarial certificate to claim ECPI if:
- you want to claim the tax exemption using the segregated assets method,
- the assets were segregated for the entire year of income
- at all times that pensions were payable during the income year, the SMSF only paid allocated pensions, market-linked pensions or account-based pensions, and no other type of pension.
If the market value of the assets supporting an income stream benefit exceeds the member account balance supporting the benefit, the excess amount won't be considered to be segregated current pension assets.
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If the SMSF pays other types of super income stream benefits and uses the segregated assets method to claim the tax exemption, you will need to obtain a certificate covering all super income stream benefits that the SMSF pays. This includes allocated pensions, market-linked pensions and account-based pensions.
You will need to obtain an actuarial certificate to claim the ECPI using the segregated assets method if any of the following apply:
- your SMSF paid any super income stream benefit other than an allocated pension, market-linked pension or an account-based pension
- the market value of a benefit that is an allocated pension, market-linked pension or account-based pension exceeds the account balance supporting the benefit.
- your SMSF is paying an allocated pension, market-linked pension or account-based pension in addition to other types of super income stream benefits
- your SMSF did not have segregated assets for the entire year of income .