SMSF: When is an Actuarial Certificate Required?

Providing more control over retirement savings along with the flexibility to choose between a wide range of investment options, self-managed super funds (SMSFs) are taking the lead among all other types of super funds within the superannuation industry in Australia. While SMSFs sure come with many benefits, to be able to reap all those benefits you should first know how to effectively run your super fund. For members of such funds it’s essential to know all the relevant SMSF rules and the obligations that apply. In this article we will take a look at some important rules regarding the process of tax exception.

Actuarial-Certificate-Smsf

Before you start drawing income streams from your SMSF, it’s important to first understand all the rules that apply when calculating the tax exceptions of your fund. In this case you should consider the specific composition of your fund’s assents and whether they will be segregated to your pension account or not. It’s also important to mention that when you decide to shift from accumulation to pension phase you gain access to a range of tax advantages on both the income stream as well as the income accumulated from assets. It also possible to claim tax exception while still paying an income stream benefit, in which case you will need to obtain an actuarial certificate SMSF document, which can help you easily calculate the exempt current pension (ECPI) you can claim.

The most common situation in which an actuarial certificate Smsf document is required is when one member of the fund wants to start drawing the pension income, while one or more members are still in the accumulation phase. You may also need this certificate when you decide to make contributions throughout the year, while drawing pension at the same time. Another instance that requires an actuarial certificate is when one member of a two member SMSF in the pension phase decides to make a large contribution and establish a new pension fund with that amount. Sometimes a SMSF can be established to pay a specific benefit pension with the purpose to determine solvency, in which case an actuarial certificate must be prepared.

The certificate has the main purpose to determine the amount of SMSF income that will be eligible for tax exception for a given financial year. The document must be prepared by a qualified actuary, who know all the relevant rules regarding the process of tax exception. You will need to provide your actuary with all the essential information related to pension payments and contributions, so he/she can accurately calculate the applicable percentage of income.

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