The SMSF Association has expressed its disappointment the 2024 federal did not include any measures to address the problematic issues arising from legacy pensions.
“We would have liked to have seen government recommitting to the legacy pension amnesty that was announced a few years ago. While it had been included in the 2021 budget we haven’t heard much since and we were hoping to see a commitment from the government that it would proceed with that amnesty and how reserves would be treated because that was the big unanswered question,” SMSF Association chief executive Peter Burgess told selfmanagedsuper.
“We think it’s important that these type of pensions are able to be commuted prior to the introduction of the proposed new Division 296 tax because we know that the way this new tax will apply to legacy pensions is going to be very messy and very complicated so it’s important that these members have an opportunity to restructure their arrangements well before the start of that measure,” he explained.
Last month the industry body renewed its calls for the legacy pension amnesty to be included in the 2024 federal budget after Treasury confirmed these income streams will be valued for Division 296 tax purposes using the relevant schedule of the Family Law (Superannuation) Regulations 2001.
“The question here is who will do the calculation. We’re pretty sure the ATO won’t be doing it and so the responsibility will pushed back onto the trustees to do the calculation or engage an actuary to perform the calculation,” he noted.
“We don’t want trustees to have to go through this process of having legacy pensions valued every year in accordance to those factors because that’s an extra cost and that’s an extra element of complexity.
“So it’s another reason why we need this amnesty,” he concluded.
