The ATO have provided important updated guidance for recipients of Market-Linked Pensions (MLP) as a result of an unintended consequence in the legislation that provides a nil value on commutation of the capped defined benefit income stream.
In some instances, members have commuted the MLP within a SMSF post 1 July 2017 for transfer balance cap (TBC) purposes to re-purchase the pension using the purchase price of the income stream (reducing the value on the member’s TBC).
Treasury will amend the law to fix this issue and the ATO will not apply compliance resources to target the double-counting on such pensions.
For more information, see the ATO news alert, https://www.ato.gov.au/…/3–advice-for-funds-where-members…/
Author: Aaron Dunn
Aaron is a well-known identity within the SMSF sector and is seen as a trusted source for professionals to learn more about SMSFs and the direction of the sector. Aaron's insights into both technical and practice-based issues within the SMSF industry sees him regularly sort out to participate as a key stakeholder across regulatory and policy issues.
As an SMSF specialist and CPA with more than 20 years experience, Aaron is the CEO and Co-founder of Smarter SMSF, a specialist business that provides technology-based solutions to educate, automate and simplify the complexities of SMSFs to accountants, financial advisers.
A lover of sport, in particular AFL football (Essendon) and athletics, Aaron was previously a nationally ranked high jumper having set a personal best jump of 2.14m.
