The ATO has released TR2011/D3 about when a
pension starts and stops.
This is relevant for a number of reasons, including whether the
income (including capital gains) of a superannuation fund is exempt
When a pension starts
A pension starts when the pension documents say so, but it
cannot be before:
the member and the trustee agree to the terms of the
if funded from rollovers, when the rollovers are received
by the fund.
This means it will be very important to make sure pension
documents specify a start date to avoid any confusion.
When a pension stops
A pension stops:
when the trustee does not comply with the rules for the pension
(for example does not make the minimum payment), in which case the
pension ceased on 1 July of the year of the non-compliance;
if the account supporting the pension runs out;
when the trustee receives a valid request from the member to
wholly commute the pension; or
upon a member's death, except where the pension is
reversionary to another beneficiary or there is a binding death
benefit nomination in place that specifies the benefit must be paid
as a pension.
This last point means that where a pensioner wishes their death
benefit to continue to their spouse or other beneficiary, relying
on the trustee's discretion about the death benefit leaves a
gap between the person's death and the death benefit pension
starting. This means the deceased member's account is no longer
in pension phase and part of the income of the fund (including
capital gains) becomes assessable for that period.
Take home messages
Where this may give rise to issues, the member should consider
the pension reversionary to their surviving spouse or other
a binding death benefit nomination that specifies both the
beneficiary and that the pension must continue to be paid
to that person.
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guide to the subject matter. Specialist advice should be sought
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Exemptions or concessions on stamp duty could apply when contemplating the purchase or transfer of NSW real estate.
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