• Requirements for claiming the tax exemption

    Actuarial certificate

    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.

    If all SMSF fund members are receiving a pension for the entire income year and the combined account balances of these pensions is equal to the market value of the fund's total assets – all fund assets meet the 'segregated' requirement as their sole purpose is to pay super income stream benefits.

    In this situation, we 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 only the following pension types
      • allocated pensions
      • market-linked pensions or
      • account-based pensions.
       

    Note: 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.

    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

    If the assets of your SMSF are not segregated for part of the year and you wish to claim ECPI for the period in which the proportionate method was used, you will be required to obtain an actuarial certificate for that period.

      Last modified: 30 Jun 2017QC 21546