Introduction

The Government’s key reforms to the superannuation system announced in the 2016/17 Federal Budget, 2 super reform bills (Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 and the Superannuation (Excess Transfer Balance Tax) Imposition Bill 2016) passed both Houses of Parliament on Wednesday 23 November 2016 and received royal assent on 29 November 2016. They are billed by the Government as the most significant changes to the superannuation system in a decade since Simplified Superannuation Reform 2007.

This FAQ page is designed to assist you to understand the impact of the superannuation reform changes and provide general guidance on the direction of what Class plans to do to implement these measures.

FAQs

Question: Is there any part of the legislation that takes part immediately, or is it all from 1 July 2017? 

Answer: Nothing takes effect prior to 1 July 2017. However, there are tax/super planning opportunities that exist before 30 June 2017, such as:

• Taking advantage of higher non-concessional contribution cap (i.e. $180K or $540K if bring forward rule is triggered);
• Reset cost base and taking advantage of transitional CGT relief and
• Commute excess amount from your pension to stay below the 1.6m transfer cap balance.

We have included a very useful summary provided in Heffron Super News about the CGT relief and segregation.

Question: What is Class doing about supporting the changes to legislation? 

Answer: Class will be making updates to its software to assist SMSF administrators in managing the introduction of these changes. There are further details below and we will provide more information in future Class release notes.

Question: How can I see which of my clients have reached/exceeded/getting near the $1.6m pension transfer cap?

Answer: 

Navigate to Business Level > Members > Members Console > Check Pension Balance > in the filter select Pension ≥ $1.6m

This will list of members with combined pension balance ≥ $1.6m.

You may also click on 'Export Pension Details to CSV' to produce an excel file extract if you want to filter data and/or use this as a checklist. 

Question:  What if my clients are close to $1.6m or have reached it - and using pension segregation - how do I find a list of funds using the segregation method and one of the member with a super balance of $1.6m or more?

Answer: 

Navigate to Business Level > Members > Members Console> in the filter select Balance ≥ $1.6m and Segregated

This will list of members with combined super balance ≥ $1.6m and the fund using segregated method for pension exemption purpose.

You may also click on 'Export Pension Details to CSV' to produce an excel file extract if you want to filter data and/or use this as a checklist. 

Question: Does my client still need an actuarial certificate after 1 July 2017? 

Answer:

An Actuarial Certificate is still required to calculate exempt current pension income for a SMSF using the unsegregated method. However, there are new situations where the actuarial certificate is no longer required in the new legislation:

• If the SMSF only has TRIS and accumulation balances, then an actuarial certificate is not required to calculate ECPI, as TRIS no longer receives a tax exemption on earnings.

Question: What's the best way to identify which of my SMSF clients has a TRIS? 

Answer: 

Navigate to Business Level > Members > Members Console > Click on TRIS as a filter

This will return a list of members with TRIS pension.

Alternatively, 

Navigate to Business Level > Members > Members Console > Pension Limits

If there is Maximum amount applicable, then it is a TRIS. in the Member Console,

Question: How can I get a list of members who are over 55 and haven’t yet used their bring forward rule?

Answer: 

Navigate to Business Level > Members > Members Console > Contribution Caps > Export Member Data to CSV 

Filter by "Member’s Age", "Bring Forward Rule not Triggered" and "Non-Concessional Contributions" made is "Less than $180,000" in the excel extract.

Question: How can I get a list of anyone who has contributed more than $25K (concessional contributions)?

Answer: 

Navigate to Business Level > Members > Member Console > Contribution Caps > Export Member Data to CSV

Then filter by "Concessional contributions made" that is greater than $25K in the excel extract.

Question: How can I get a list of anyone who has super balance less than $500K?

Answer: 

Navigate to Business Level > Members > Member console > Select the filter balance < $500K

This will return a list of members with super balance less than $500,000.

You may also click on 'Export Pension Details to CSV' to produce an excel file extract if you want to filter data and/or use this as a checklist. 

Question: Can I get the last four years’ concessional contributions so I can see if my client can use any of the carry forward unused cap amount?

Answer: This measure has a commencement date as of 1 July 2018, which means FY 2018-19 is the first year you can accrue any unused concessional contribution cap. Class will release the functionality for you to track this in late 2017.

Question: For the removal of 10% income test on personal concessional contributions, are there any updates to the s290-170 notice form?

Answer: No, however the ATO’s instruction on the s290-170 notice will be updated to remove this 10% income test reference.

Question: Will Class support the electronic reporting around Release Authorities for Division 293 tax, Excess Concessional Contribution and Non-Concessional Contribution, etc.?

Answer: Class will support this once the ATO has provided the electronic specification on release authorities and they support reporting of them electronically.

Question: Can you take a partial or full commutation from a TRIS?

Answer: Before 1 July 2017, you can make an election to treat the payment from TRIS as a lump sum. The new legislation has removed the ability to make such election. You can still make partial or full commutation from a pension or TRIS provided if they have unrestricted components.

Question: Does Class support annuities?

Answer: Most annuity products, including those innovative retirement products proposed in the legislation, will require trustees to roll over part of the SMSF pension balance to purchase them. Therefore, they should be considered as outside of your SMSF but they will still form part of the $1.6m transfer cap balance.