Pensions, Superannuation

SMSF Association welcomes budget inclusions

The SMSF Association has backed the federal government’s proposed changes to calculating exempt current pension income (ECPI) and increasing the age at which the work test for making contributions to superannuation applies.

Commenting on the development, association chief executive John Maroney said streamlining administrative requirements to calculate ECPI is a welcome initiative and one the body advocated in its budget submission as a way to reduce red tape.

“Changes will be made to allow superannuation fund trustees with interests in both the accumulation and retirement phases during an income year to choose their preferred method of calculating ECPI,” Maroney said.

According to Maroney, the ATO currently requires the use of both the proportionate method and segregated method for relevant parts of an income year and this can be unnecessarily complex.

He pointed out the budget measure will once again make allowable the practice of using the proportionate method and calculating ECPI through an actuarial certificate, something the industry had done previously.

“The government will also remove the requirement for superannuation funds to obtain an actuarial certificate when calculating ECPI using the proportionate method where all members of the fund are fully in the retirement phase for the entire income year,” he noted.

Further, the industry body labelled the decision to increase the work test age to 67 to be aligned with the age pension age from 1 July 2020 as another positive change.

“It’s the association’s policy position to support greater flexibility for making contributions to superannuation. Although we suggested that the government should remove the work test altogether in our budget submission, this measure is a step in the right direction,” Maroney said.

Welcoming the government’s decision to largely leave superannuation alone in this budget, he said: “Many SMSF trustees and their advisers are still experiencing the compliance impacts of the 2016 budget changes that began on 1 July 2017, so the fact there are no more major changes in the pipeline is extremely positive.”

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