Overview Where an SMSF pays a retirement phase income stream to one or more members, an actuarial certificate may be required to determine the proportion of the fund’s income that is exempt from income tax. This exemption is calculated under the proportionate (actuarial) method and is referred to as Exempt Current Pension Income (ECPI). An account-based…
For an SMSF that does not pay defined benefit pensions, an actuarial certificate is generally only required when the fund’s assets support both accumulation interests and retirement phase pensions at the same time during the financial year. In practice, many funds appear to meet this condition — but on closer examination, they don’t. Most SMSFs…
Today, many SMSF members are aware that once their fund begins paying “retirement phase” pensions, it no longer has to pay income tax on some or all of its investment earnings, including rent, interest, dividends, and capital gains. The concept of the “retirement phase” in superannuation can be confusing, but it’s crucial for anyone approaching…
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