SMSF trustees making contributions to their fund as a result of a risk insurance payout need medical practitioner verification before it can be classified as a structured settlement and receive concessional treatment under the new superannuation rules.
“Structured settlement contributions – what are they? Personal injury claims or workers’ compensation claims. What is not very well known is these payments need to be signed off by two qualified medical practitioners saying that the client has suffered an injury to the extent that they can no longer work in an occupation they are reasonably qualified by education, training or experience,” SuperConcepts technical services and education general manager Peter Burgess told delegates at the selfmanagedsuper SMSF Professionals Day 2017.
“You’ve got to have those two medical certificates.”
Burgess emphasised it was imperative for advisers to be aware of any contributions like this their clients may have made.
“As advisers you are going to need to identify and become really good at identifying structured settlement contributions,” he said.
“It’s important you identify those type of contributions because you need to make sure they’re reported properly to the ATO.
“If they’re classified as structured settlement contributions, they’re not counted against the transfer balance cap and they’re not counted against a person’s total super balance either.”
He pointed out that apart from the medical verification there was one other requirement trustees had to satisfy with these types of contributions.
“The payment needs to be contributed within 90 days of the proceeds being received, but the commissioner can extend that.”