The value of an asset that is reported for transfer balance cap purposes when starting an SMSF pension can differ from that included in the fund’s financial statements, with the latter requiring a more precise and accurate figure, a sector educator has stated.
Smarter SMSF chief executive and co-founder Aaron Dunn noted that in guidance released earlier this year about valuing assets in an SMSF, the ATO indicated when an estimate could be used and when a more detailed and accurate figure must be applied when calculating pensions.
“One of the things the ATO referenced with the operation of pensions was around the difference with reporting for when we start a pension for transfer balance cap purposes versus what we have when claiming exempt current pension income (ECPI) in the fund,” Dunn said at the recent ASF Audits Technical Summit 2026 in Adelaide.
“The ATO makes it very clear in their guidance that when we start a pension, we have some prescribed timeframes we must meet to ensure the transfer balance account reporting obligations are satisfied, and that is 28 days after the end of the quarter in which that event occurs.
“A lot of us have challenges in trying to get that information done by 28 October when we’re trying to do 30 June accounts.
“The ATO says, for transfer balance cap purposes, it does accept a reasonable estimate of the value of the account balance can be used and this is relevant if we are starting a pension mid-year,” he said, adding this estimate could be used if a full valuation of the assets supporting the pension was not possible by 28 October.
“Historically, what we have done when it comes to starting pensions is wait to get the financial statements completed before we got the reporting done.
“That’s not what the ATO is saying we need to do. We can use an estimate of the assets there.
“If we are doing this, we don’t need to worry about going back and adjusting it to the precise figure of what the financial statements might prescribe us to do.”
He pointed out the regulator had a higher standard for what was included in the financial statements and was more definitive in terms of its expectations with market value.
“[The ATO guidance states] although a reasonable estimate of the value of the pension can be used in these [initial] circumstances, you can’t rely upon this estimate when preparing the financial accounts and statements of the fund because they want it to be an exact science when we calculate the fund’s ECPI entitlement,” he said.
Jason Spits
SENIOR JOURNALIST
Jason is a senior journalist with Benchmark Media and writes for the selfmanagedsuper website and magazine and smstrusteenews website. He has covered financial services since 1999 and has written about life insurance, superannuation, investment management and financial advice, in both a freelance and in-house capacity, and also did a brief stint as a media manager for an industry association. He has been the editor of trade titles Money Management and Financial Standard, and was most recently senior journalist with life insurance title Riskinfo.
Articles by Jason