From 1 July 2017, the amount the Members will be able to transfer into the tax exempt pension phase of superannuation will be capped at $1.6 million.
Any amounts in excess of the cap will need to be transferred out of the tax exempt pension phase, either back to the accumulation phase (earnings taxable at 15%) or out of the superannuation system entirely as a lump sum. Although transfers to the tax exempt pension phase will be limited to $1.6 million, there are no restrictions on how much a Member can continue to hold in the accumulation phase. If your pension balance is over $1.6 million, you will need to make a request to convert part or all of your pension accounts into accumulation phase to ensure that your total pension balance does not exceed $1.6 million. You can download the minute template by clicking on the button below:
If you have a pension balance of over $1.6 million, you might need to purchase an actuarial certificate to determine which portions of the SMSF are taxed at 15% and which portions are tax free. For more information on actuarial certificates, please click on the button below:
If your total pension balance is over $1.6 million, you will not be able to use the segregated method for the SMSF’s assets. For more information, please see the Tax Office Video below:
For more information on the Super changes, please see our website page here.