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ATO advice for SMSF members with a market-linked pension

The Australian Tax Office (ATO) has recently been made aware of circumstances where a member of a SMSF commences a new market-linked pension and unintentionally exceeds their transfer balance cap.

An individual may have exceeded their transfer balance cap if they were receiving a life expectancy or market-linked pension just before 1 July 2017 (which was a capped defined benefit income stream) and then commuted the pension on or after 1 July 2017 and the transfer balance debit is nil under the special value rule in Income Tax Assessment Act 1997 subsection 294-1245(1); and then commenced a new market-linked pension.

The ATO has acknowledged these are unintended consequences associated with the current law and will not take compliance action at this stage provided an individual’s circumstances align with the above situation and:

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Basics of SMSF investing

January 21, 2021

Setting up an SMSF fund is the simplest step. Establishing a fund which delivers you consistent returns from your investments is much more difficult.

Investing successfully involves determining precise goals and picking investments which will effectively achieve those goals. The advantage of SMSFs is that you can build a portfolio which reflects your short-term and long-term goals in response to changing market conditions.

In an SMSF fund, your investment options are:

Before you begin investing, consider what might be the best way to diversify your portfolio. How you portion your investments will depend on your funds, the market, and your goals. Regardless of what your plan is, diversification should be a priority.

Choosing an SMSF as opposed to an industry or retail super fund provides you with more flexibility, but also with more responsibility. Researching before investing is key if you want the best out of your SMSF.