Specialist SMSF administration provider Xpress Super has warned SMSF members they are in danger of losing their Commonwealth Seniors Health Card (CSHC) as a result of the impending legislative changes to the sector.
“From 1 January 2015 the new deeming rules mean that account-based pensions started after this date will be assessed differently when determining an individual’s eligibility to receive the CSHC. It is something SMSFs must be vigilant about,” Xpress Super chief executive Olivia Long said.
The new legislative regime means that from 1 January 2015 deeming rules applied to the income from account-based pensions will be included in the income test determining if a member is eligible for a CSHC.
However, grandfathering rules in the legislation will apply to account-based pensions activated before 31 December 2014, allowing income payments to be assessed concessionally for the CSHC qualification.
“Retirees need to be careful because if a pension is ‘reset’ via a stop and restart, then this is considered a new pension and grandfathering is lost,” Long warned.
“Not many people realise that if eligibility for the card is lost, even for a short period of time, the grandfathering for all the account-based pension is lost.
“This can occur even if a person travels overseas for just six weeks.”
The situation presents a good opportunity for SMSF trustees to review the structure of their funds.