SMSF trustees going through a relationship breakdown should not automatically use SuperStream to roll over their retirement savings to another fund as its use will not apply for some assets, a superannuation lawyer has stated.
DBA Lawyers director William Fettes said while there were compliance requirements to move money out of an SMSF using SuperStream, some assets must be processed outside the payment system overseen by the ATO.
Fettes gave the example of a couple who were both members and trustees of an SMSF and following a relationship breakdown had reached a property settlement via minutes of consent in which the husband would receive a $100,000 top-up to his current balance of $350,000 before leaving the fund.
“The trustees are at the point they want to arrange the transfer. Does this need to be done under SuperStream?” he said during an online briefing last Friday.
“With SuperStream, we’ve got a few exemptions, but it’s not all the exemptions you would necessarily think and so I would ask the question: Is the transfer in specie?
“If there was an asset involved, if the $450,000 comprised some property for instance, it’s outside of SuperStream.
“If we’re dealing with cash amounts, we have further questions to ask, and the next question is: If it is cash, is the rollover pursuant to a split as a transfer of transferrable benefits under the [Superannuation Industry (Supervision)] Regulations [7A.05 and 7A.12]? If the answer to that is yes, then it would be outside of SuperStream as well.”
He said given the $100,000 is a top-up split amount, it was safe to say that amount would be transferred to the husband’s new fund outside of SuperStream, but his remaining entitlements of $350,000 are not a transfer of transferable benefits.
“They are actually a rollover of his member entitlements and though that is directly in connection with the minutes of consent, it’s not outside of SuperStream,” he added.
“The ATO is somewhat unapologetic about that even though that makes the transfer a bit cumbersome.
“We have all these areas where you think the family law process should have some special recognition and support, and in many cases there are areas of the law where that’s true, but not in this case.
“So even though orders may require a split amount and a rolling out of entitlements, the latter part is under SuperStream unless it’s done by in-specie transfer. To a certain extent that’s a pretty unsatisfactory situation, but that’s how the rules work.”
