Author: Emma Partenza, Manager, TAG Financial Services
The Treasury Laws Amendment (2021 Measures No. 6) Bill 2021 has just received royal assent and contains important ECPI changes. There are also changes to information sharing regarding Family Law matters.
Exempt Current Pension Income (ECPI)
Initially proposed as part of the 2018-19 budget was to remove the unnecessary requirement to obtain an actuarial certificate where the fund’s assets are 100% in pension phase.
Disregarded small fund assets was introduced on 1 July 2017 whereby an actuarial certificate is required to be obtained where 100% of the funds’ assets were supporting retirement phase income streams, to be able to claim ECPI.
Where a member had more than $1,600,000 at the previous 30 June in superannuation (across all funds) and was also in receipt of a retirement phase income stream – then the segregated method could not apply.
The unsegregated method has been required to be used and an actuarial certificate obtained to claim ECPI (even where it would result in 100%) for the financial year.
The measure was introduced due to the limit on amounts that can be transferred into retirement phase whereby trustees could not circumvent the rules and obtain tax advantages by using the segregation method (either by deemed segregation or assets elected to be segregated to retirement phase).
This is a welcomed cost saving to affected SMSFs in reducing red tape. It is applicable from FY2021-22 financial year.
Please note the legislation does not include trustees being able to apply a choice of method for claiming ECPI where the fund has segregated and unsegregated periods during a financial year. Watch this space.
Improving the visibility of superannuation assets in family law proceedings
This Bill amends the Taxation Administration Act 1953 and the Family Law Act 1975 to allow the identification of superannuation assets held by parties to family law proceedings; thereby leveraging information held by the ATO.
It will allow a party to a family law property proceeding (in the courts of Family Court of Australia, Federal Circuit Court of Australia and Family Court of WA) to be able to apply to the court and request information as to the identity and value of their former partner’s superannuation interests.
The sharing of information will make it harder for parties to either hide, under disclose or not disclose their superannuation benefits during such proceedings.
If you have any questions about these changes please contact us on 03 9886 0800 or via email.
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Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686). Copyright 2021. Please do not reproduce without the expressed written consent of the author.