SmartCompany reports that the ATO are paying close attention to tax exemptions claimed in the pension-paying phase for SMSFs. “Exempt current pension income” (ECPI) is the income set aside to pay for pensions. An SMSF can claim an exemption from income tax in their annual return but it is not automatically entitled to the exemption. Only earnings and capital gains from assets supporting the pension payment can be included, not employer contributions or assessable employee contributions. It is important that assets are re-valued to current market value before pension payment and an actuarial certificate is lodged – otherwise the ECPI claim may be disallowed. Come in an see us if you need advice on how to correctly manage your SMSF taxes in the pension phase.
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