News : ECPI

ECPI

ECPI possible on pension of dead member

An SMSF where all the members have died and pensions reverted to the last person standing may be able to claim ECPI even if no minimum payments were made.

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ECPI

Don’t overlook tax in ECPI timing

SMSF members making a contribution late in the year to maximise exempt current pension income (ECPI) should be advised that an earlier move may be a better option when considering their tax position outside of the fund, an SMSF actuary has highlighted.

Making a contribution late in the year to maximise ECPI may not be the best strategy when an SMSF member takes a tax hit while waiting to contribute those funds.

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Administration, ECPI, Tax

ECPI method can impact investment strategy

SMSF Self-managed superannuation Accurium Anthony Cullen ECPI exempt current pension income investment strategy segregation of assets

Trustees using the segregated method to calculate ECPI must have this decision reflected in the SMSF’s investment strategy in some circumstances.

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ECPI

Default ECPI calculation possible

ECPI method SMSF exempt current pension income Tim Miller Smarter SMSF

A default option will apply if trustees don’t make a deliberate choice as to how an SMSF’s ECPI is calculated in certain situations.

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ATO, Compliance, ECPI, Tax

Avoid ECPI Div 296 exploits

ECPI exempt current pension income Division 296 tax Total superannuation balance TSB

SMSFs should avoid strategies that exploit the tax-free aspects of the ECPI rules to sidestep potential Division 296 tax liabilities as they are readily identifiable as avoidance schemes.

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ECPI

ECPI rules of thumb available

calculating ECPI

Practitioners can apply some rules of thumb to help their clients choose the most suitable method of calculating ECPI for a given financial year.

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ECPI

Recording ECPI choice a must

ECPI choice

The method decided upon to calculate how an SMSF calculates its exempt current pension income has to be recorded officially.

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ECPI

Claiming ECPI is optional

claim ECPI

Even though an SMSF may be eligible to claim exempt current pension income, the fund’s trustees may choose not to take this course of action.

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ECPI

Rule of thumb useful in choosing ECPI method

ECPI method

SMSF actuaries are unlikely to recommend a preferred method for calculating exempt current pension income so practitioners should use a rule of thumb to make that call.

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ECPI

ECPI calculation switchable year-on-year

ECPI calculation

SMSFs are not locked in to using the same exempt current pension income (ECPI) calculation method each year and can freely switch as it suits them.

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