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Junior Member
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Last Login: 6/06/2007 7:56:14 PM
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One fund member is moving to pension mode as of 1 July, using the actuarial rather than segregated assets. I understand the mechanics of moving to pension mode, but:
1. am uncertain whether to adjust members equity to unrestricted/ unpreserved either during, before, or after Year End processing? Presumably it will involve a general journal? There was an ETP rollin this year which I entered per the rollin statement.
2. Also, because some fund income is distributions which won't deliver final details to us for a couple of months or so, the year end won't happen for real until Aug/Sept. No pension payment will be made before then anyhow, but should I set it to 'pension' immediately, or can it wait until everything else is finalised, then switch it with start date of 1/7/04?
3. If the answer to (2) is yes, it can wait, then presumably the tax office forms can be based on a manual calculation of the actuarial percentage - on the basis that they are derived from opening balance which is firm and contributions which are also firm, not on the fund income, provided I am not on the very edge of max/min pension amountg? Does that make sense?
Thanks.
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MySF Administrator
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Last Login: 16/05/2012 7:43:33 PM
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1. am uncertain whether to adjust members equity to unrestricted/ unpreserved either during, before, or after Year End processing? Presumably it will involve a general journal? There was an ETP rollin this year which I entered per the rollin statement.
Answer
Yes for the Member moving to Pension mode it means that there is an amount that moves from being Preserved to Un-restricted. This is of course on the basis that a Condition of Release has been satisfied. A General Journal is the best way to do this but it should be after July 1. The original ETP statement will stay against the original transaction. All you need to do is move the Balances.
2. Also, because some fund income is distributions which won't deliver final details to us for a couple of months or so, the year end won't happen for real until Aug/Sept. No pension payment will be made before then anyhow, but should I set it to 'pension' immediately, or can it wait until everything else is finalised, then switch it with start date of 1/7/04?
Answer
There is no problem delaying the change to Pension mode, and for preference it should be done after the year end rollover. You can reset the Member to Pension mode from 1 July 04 at any time in the new Financial Year - right through to 30 June 2005.
3. If the answer to (2) is yes, it can wait, then presumably the tax office forms can be based on a manual calculation of the actuarial percentage - on the basis that they are derived from opening balance which is firm and contributions which are also firm, not on the fund income, provided I am not on the very edge of max/min pension amountg? Does that make sense?
Answer
You may need to talk to your advisor about this. I understand that the value of the Fund as at the 30th of June 2004 is the basis that is used. Any income that comes in after that date does not add to the value of the fund, but is treated as income in the new year.
Your Advisor may tell you that under Section 283 of the Income Tax Assessment Act 1936 you will require an Actuarial certificate for the valuation of the fund. Then again because I am not an Advisor I may be wrong and your advisor may not tell you that at all. I would suggest you talk to your advisor.
Hope this helps
Regards
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Junior Member
Group: Forum Members
Last Login: 6/06/2007 7:56:14 PM
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Thanks Chris.
I just had a very useful discussion with the ATO (SMSFs area), after ploughing through their site most of yesterday, and not fully understanding it all. Their helpful person told me that:
1. They will not regard it as a serious breach if the required RBL Benefit Reporting form (NAT 2933) is lodged later than "the 14th of the month following the month the pension commences" provided this is because the tax return is delayed (thus final fund position/purchase price of pension) due to Distribution statements with tax info not arriving until late Aug/early September. So 2 months late will be forgiven. I asked if I should put in an initial form, and then an amendment and he advised me to go with the one form when the tax return is completed.
2. The Actuarial Certificate is not required for setting up the pension when the RBL form is submitted, only for the tax return at the end of the year; ie the Certificate will apply to F2005, not 03/04. Hooray - One less complication!!
Those were the two most useful things - since we want to start it as of 1/7/04 to ensure tax exempt income for the whole year.
He also answered some other queries I had, where the instructions were confusing or my knowledge lacking. This may be helpful for others in our situation (we are doing Allocated Pension for 1 member, 1 annual payment late in the financial year, and assets remain unsegregated, plus we have not functioned as employers, but rolled in ETPs from elsewhere):
The Eligible Service Period is taken from the first day of employment of the first employer, taken from the rollin statements, rather than from the day that the member joined the Fund.
Some of the 'components' required in Section 9 of the form will not be relevant - and can be obtained from the rollin statements and/or member reports, the critical one being undeducted contributions, and the pre-post 83 bizzo.
The ATO will work out the 27H stuff for tax offsets if relevant, and are happy to give advice on other areas of difficulty.
Overall, I have to say that they were really helpful, and the task of sorting the pension and tax is now somewhat less daunting! Their web site is rich, and I found additional information when I went in through the Superannual Professionals as well as the SMSF gates.
Finally, I'm conscious that I get a bit garrulous in my postings - but I find other people's questions and answers REALLY helpful, and would love to see people using the Forum more to pool our learnings.
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