Australia ▾
  Australia   New Zealand
Join Now

Home | Price List | Contact

Login
Forgot your password?
  • Trust

    Trust

    • Acknowledgement of Trust (already own asset) - $165
    • Change Appointor and/or Guardian of Family Trust - $110
    • Change of Name of Family Trust - $110
    • Change Trustee of Family Trust - $110
    • Dealing with Forgiven Debts (White Paper) - $55
    • Debt Recognition (including pre-Div 7A Loans) - $33
    • Declaration of Trust (before you buy) - $110
    • Div 7A Loan Agreement - $65
    • Div 7A Loan Agreement for UPE - $65
    • Family Trust - $165
    • Family Trust - Streaming & Bamford Update - $165
    • Family Trust - Update to Allow Change of Appointor and Guardian - $165
    • Family Trust - Update to allow Sole Trustee - $55
    • Family Trust - Update to Exclude Foreign Persons (NSW) - $198
    • Family Trust - Wind up/Vesting - $259
    • Forgiveness of Debt - $121
    • Opening Minutes for the Unit Trust - $33
    • Partnership Deed - $220
    • Release of Unpaid Trust Entitlement - $121
    • The new small business restructure roll-over rules in practice (White Paper) - $55
    • Trust Distribution Minutes Library for 2008/09 - $99
    • Trust Distribution Minutes Library for 2009/10 - $99
    • Trust Distribution Minutes Library for 2010/11 - $99
    • Trust Distribution Minutes Library for 2011/12 - $99
    • Trust Distribution Minutes Library for 2012/13 - Multi-Use - $350
    • Trust Distribution Minutes Library for 2012/13 - Single-Use - $110
    • Trust Distribution Minutes Library for 2013/14 - Multi-Use - $350
    • Trust Distribution Minutes Library for 2013/14 - Single-Use - $110
    • Trust Distribution Minutes Library for 2014/15 - Multi-Use - $350
    • Trust Distribution Minutes Library for 2014/15 - Single-Use - $110
    • Trust Distribution Minutes Library for 2015/16 - Multi-Use - $350
    • Trust Distribution Minutes Library for 2015/16 - Single-Use - $110
    • Trust Distribution Minutes Library for 2016/17 - Multi-Use - $350
    • Trust Distribution Minutes Library for 2016/17 - Single-Use - $110
    • Trust Distribution Minutes Library for 2017/18 - Multi-Use - $350
    • Trust Distribution Minutes Library for 2017/18 - Single-Use - $110
    • Trust Distribution Minutes Library for 2018/19 - Multi-Use - $350
    • Trust Distribution Minutes Library for 2018/19 - Single-Use - $110
    • Trust Distribution Minutes Library for 2019/20 - Multi-Use - $350
    • Trust Distribution Minutes Library for 2019/20 - Single-Use - $121
    • Trust Distribution Minutes Library for 2020/21 - Multi-Use - $350
    • Trust Distribution Minutes Library for 2020/21 - Single-Use - $121
    • Trust Distribution Minutes Library for 2021/22 - Multi-Use - $350
    • Trust Distribution Minutes Library for 2021/22 - Single-Use - $121
    • Trust Distribution Minutes Library for 2022/23 - Multi-Use - $363
    • Trust Distribution Minutes Library for 2022/23 - Single-Use - $132
    • Trust Distribution Minutes Library for 2023/24 - Multi-Use - $363
    • Trust Distribution Minutes Library for 2023/24 - Single-Use - $132
    • Trust Distribution Minutes Library for 2024/25 - Multi-Use - $363
    • Trust Distribution Minutes Library for 2024/25 - Single-Use - $132
    • Unit Trust - $165
    • Unit Trust - Add New Member Kit - $110
  • Superannuation

    Superannuation

    • Acknowledgement of Trust (already own asset) - $165
    • Commercial Lease - $275
    • Declaration of Trust (before you buy) - $110
    • Derivative Risk Statement for SMSF - $65
    • Investment Strategy for Self Managed Super 15/16 - $65
    • Investment Strategy for Self Managed Super 16/17 - $65
    • Investment Strategy for Self Managed Super 17/18 - $65
    • Investment Strategy for Self Managed Super 18/19 - $65
    • Investment Strategy for Self Managed Super 19/20 - $65
    • Investment Strategy for Self Managed Super 20/21 - $65
    • Investment Strategy for Self Managed Super 21/22 - $65
    • Investment Strategy for Self Managed Super 22/23 - $65
    • Investment Strategy for Self Managed Super 23/24 - $65
    • Investment Strategy for Self Managed Super 24/25 - $65
    • Pension Pack for Self Managed Super - $299
    • Product Disclosure Statement (general) - $66
    • Product Disclosure Statement (Pension only) - $99
    • Self Managed Superannuation Fund Deed - $165
    • SMSF - Minute to Appoint Administrator - $33
    • SMSF - Minute to Appoint an Auditor - $33
    • SMSF - Minute to Approve Financial Statements - $33
    • SMSF - Minute to Insure The Members - $33
    • SMSF - Update Rules - $165
    • SMSF Limited Recourse Borrowing Arrangement - $330
    • SMSF Restricted Commercial Property Assessment - $695
    • SMSF Restricted Residential Property Assessment - $315
    • Statutory Declaration - $0
  • Estate Planning

    Estate Planning

    • Codicil to change the Executor - $99
    • Confidentiality Agreement (Non Disclosure) - $99
    • Debt Recognition (including pre-Div 7A Loans) - $33
    • Enduring Power of Attorney - NSW - $55
    • Enduring Power of Attorney - SA - $55
    • Enduring Power of Attorney - WA - $55
    • Enduring Power of Attorney (Financial, Personal/Health) - QLD - $55
    • Enduring Power of Guardianship - NSW - $55
    • Enduring Power of Guardianship - WA - $55
    • Power Of Attorney By Company - $99
    • Will - Married or Defacto No Children - $95
    • Will - Married or Defacto with Children - $95
    • Will - Single No Children - $110
    • Will - Single With Children - $110
  • Commercial

    Commercial

    • Advanced Legal Health Check for Businesses - $18
    • Buy a House with Friends Agreement - $110
    • Commercial Lease - $275
    • Confidentiality Agreement (Non Disclosure) - $99
    • Co-Owners Agreement - $110
    • Dealing with Forgiven Debts (White Paper) - $55
    • Debt Recognition (including pre-Div 7A Loans) - $33
    • Declaration of Trust (before you buy) - $110
    • Demand and Statement of Claim for Debt - NSW - $88
    • Demand and Summons for Debt - VIC - $88
    • Demand and Summons for Debt - WA - $88
    • Div 7A Loan Agreement - $65
    • Div 7A Loan Agreement for UPE - $65
    • Forgiveness of Debt - $121
    • Loan Agreement (No Security) - $110
    • Release of Unpaid Trust Entitlement - $121
    • Statutory Declaration - $0
    • The new small business restructure roll-over rules in practice (White Paper) - $55
  • Employment

    Employment

    • Confidentiality Agreement (Non Disclosure) - $99
    • Employment - Conduct Issues Letter - $33
    • Employment - Employee Expenses Policy - $55
    • Employment - Performance Issues Letter - $33
    • Employment - Request for Medical Information - $33
    • Employment - Termination Letter - $33
    • Employment - Transferring Employee Letter - $33
    • Employment Contract - $120
    • Independent Contractors Agreement - $110
    • Partnership Deed - $220
    • Statutory Declaration - $0
  • Company

    Company

    • Acknowledgement of Trust (already own asset) - $165
    • Adopt Committee Recommendations kit - $33
    • Appoint a Committee kit - $33
    • Appoint an Alternate Director kit - $33
    • Appoint Managing Director & Confer Powers kit - $33
    • Buy a House with Friends Agreement - $110
    • Change Registered Office kit - $33
    • Commercial Lease - $275
    • Company (ELodgement) - $716
    • Company (No Elodgement) - $99
    • Company Constitution Update - $99
    • Confidentiality Agreement (Non Disclosure) - $99
    • Co-Owners Agreement - $110
    • Debt Recognition (including pre-Div 7A Loans) - $33
    • Declaration of Trust (before you buy) - $110
    • Demand and Statement of Claim for Debt - NSW - $88
    • Demand and Summons for Debt - VIC - $88
    • Demand and Summons for Debt - WA - $88
    • Director‘s Indemnity Agreement - Compulsory Insurance - $197
    • Director‘s Indemnity Agreement - No Insurance - $197
    • Div 7A Loan Agreement - $65
    • Div 7A Loan Agreement for UPE - $65
    • Employment Contract - $120
    • Family Trust - Wind up/Vesting - $259
    • Forgiveness of Debt - $121
    • Independent Contractors Agreement - $110
    • Loan Agreement (No Security) - $110
    • Minutes for Members to Inspect Books - $33
    • Minutes for Resigning Director - $33
    • Opening Minutes for the Unit Trust - $33
    • Partnership Deed - $220
    • Power Of Attorney By Company - $99
    • Release of Unpaid Trust Entitlement - $121
    • Remove a Managing Director kit - $33
    • Remove and Replace a Director kit - $44
    • Replace Company Secretary kit - $44
    • Self Managed Superannuation Fund Deed - $165
    • Statutory Declaration - $0
    • Transfer of Shares Kit - $0
    • Unit Trust - $165
    • Unit Trust - Add New Member Kit - $110
  • CPD Webinars

    CPD Webinars

    • CPD Webinar - Tax and Cryptocurrency – A Square Peg in a Round Hole - $110
    • CPD Webinar - Unlocking Microsoft 365 Copilot - $110
    • CPD Webinar - UPEs and Div 7A – Implications of the Recent Bendel Decision - $110
    • CPD Webinar - When Directors are Personally Liable - $110
    • Webinar On Demand - Foreign Trust Taxation Issues - $110
    • Webinar On Demand - Advising on Family Trusts in the 21st Century - $110
    • Webinar On Demand - AI in Professional Practices - Risks and Benefits - $110
    • Webinar On Demand - Drafting Estate Planning Documents to meet Litigation Risks - $110
    • Webinar On Demand - Employee Share Schemes - $99
    • Webinar On Demand - End Of Financial Year SMSF Planning 2025 - $110
    • Webinar On Demand - End Of Financial Year Tax Rollup 2025 - $110
    • Webinar On Demand - Family Law and Trusts - $110
    • Webinar On Demand - How Binding are Financial Agreements - $110
    • Webinar On Demand - Professional Advisers as Appointor of their Client’s Family Trust - $110
    • Webinar On Demand - Recent Changes in Family Law - $99
    • Webinar On Demand - Sexual Harassment Laws in Australia - $110
    • Webinar On Demand - Small Business Restructures and Director Penalty Notices - $110
    • Webinar On Demand - Tax & Family Trusts - $99
    • Webinar On Demand - Testamentary Trusts 101 - $110
    • Webinar On Demand - Trust Distributions and Section 100A - $99
    • Webinar On Demand - When Directors are Personally Liable - $110
    • Webinar On Demand - Where Death Benefit Nominations Go Wrong - $110
  • All documents

    All documents

    • Acknowledgement of Trust (already own asset) - $165
    • Adopt Committee Recommendations kit - $33
    • Advanced Legal Health Check for Businesses - $18
    • Appoint a Committee kit - $33
    • Appoint an Alternate Director kit - $33
    • Appoint Managing Director & Confer Powers kit - $33
    • Buy a House with Friends Agreement - $110
    • Change Appointor and/or Guardian of Family Trust - $110
    • Change of Name of Family Trust - $110
    • Change Registered Office kit - $33
    • Change Trustee of Family Trust - $110
    • Codicil to change the Executor - $99
    • Commercial Lease - $275
    • Company (ELodgement) - $716
    • Company (No Elodgement) - $99
    • Company Constitution Update - $99
    • Confidentiality Agreement (Non Disclosure) - $99
    • Co-Owners Agreement - $110
    • CPD Webinar - Tax and Cryptocurrency – A Square Peg in a Round Hole - $110
    • CPD Webinar - Unlocking Microsoft 365 Copilot - $110
    • CPD Webinar - UPEs and Div 7A – Implications of the Recent Bendel Decision - $110
    • CPD Webinar - When Directors are Personally Liable - $110
    • Dealing with Forgiven Debts (White Paper) - $55
    • Debt Recognition (including pre-Div 7A Loans) - $33
    • Declaration of Trust (before you buy) - $110
    • Demand and Statement of Claim for Debt - NSW - $88
    • Demand and Summons for Debt - VIC - $88
    • Demand and Summons for Debt - WA - $88
    • Derivative Risk Statement for SMSF - $65
    • Director‘s Indemnity Agreement - Compulsory Insurance - $197
    • Director‘s Indemnity Agreement - No Insurance - $197
    • Disclaimer - Email - $55
    • Div 7A Loan Agreement - $65
    • Div 7A Loan Agreement for UPE - $65
    • Employment - Conduct Issues Letter - $33
    • Employment - Employee Expenses Policy - $55
    • Employment - Performance Issues Letter - $33
    • Employment - Request for Medical Information - $33
    • Employment - Termination Letter - $33
    • Employment - Transferring Employee Letter - $33
    • Employment Contract - $120
    • Enduring Power of Attorney - NSW - $55
    • Enduring Power of Attorney - SA - $55
    • Enduring Power of Attorney - WA - $55
    • Enduring Power of Attorney (Financial, Personal/Health) - QLD - $55
    • Enduring Power of Guardianship - NSW - $55
    • Enduring Power of Guardianship - WA - $55
    • Family Trust - $165
    • Family Trust - Streaming & Bamford Update - $165
    • Family Trust - Update to Allow Change of Appointor and Guardian - $165
    • Family Trust - Update to allow Sole Trustee - $55
    • Family Trust - Update to Exclude Foreign Persons (NSW) - $198
    • Family Trust - Wind up/Vesting - $259
    • Forgiveness of Debt - $121
    • Independent Contractors Agreement - $110
    • Investment Strategy for Self Managed Super 15/16 - $65
    • Investment Strategy for Self Managed Super 16/17 - $65
    • Investment Strategy for Self Managed Super 17/18 - $65
    • Investment Strategy for Self Managed Super 18/19 - $65
    • Investment Strategy for Self Managed Super 19/20 - $65
    • Investment Strategy for Self Managed Super 20/21 - $65
    • Investment Strategy for Self Managed Super 21/22 - $65
    • Investment Strategy for Self Managed Super 22/23 - $65
    • Investment Strategy for Self Managed Super 23/24 - $65
    • Investment Strategy for Self Managed Super 24/25 - $65
    • Loan Agreement (No Security) - $110
    • Minutes for Members to Inspect Books - $33
    • Minutes for Resigning Director - $33
    • Opening Minutes for the Unit Trust - $33
    • Partnership Deed - $220
    • Pension Pack for Self Managed Super - $299
    • Power Of Attorney By Company - $99
    • Product Disclosure Statement (general) - $66
    • Product Disclosure Statement (Pension only) - $99
    • Release of Unpaid Trust Entitlement - $121
    • Remove a Managing Director kit - $33
    • Remove and Replace a Director kit - $44
    • Replace Company Secretary kit - $44
    • Self Managed Superannuation Fund Deed - $165
    • SMSF - Minute to Appoint Administrator - $33
    • SMSF - Minute to Appoint an Auditor - $33
    • SMSF - Minute to Approve Financial Statements - $33
    • SMSF - Minute to Insure The Members - $33
    • SMSF - Update Rules - $165
    • SMSF Limited Recourse Borrowing Arrangement - $330
    • SMSF Restricted Commercial Property Assessment - $695
    • SMSF Restricted Residential Property Assessment - $315
    • Statutory Declaration - $0
    • The new small business restructure roll-over rules in practice (White Paper) - $55
    • Transfer of Shares Kit - $0
    • Trust Distribution Minutes Library for 2008/09 - $99
    • Trust Distribution Minutes Library for 2009/10 - $99
    • Trust Distribution Minutes Library for 2010/11 - $99
    • Trust Distribution Minutes Library for 2011/12 - $99
    • Trust Distribution Minutes Library for 2012/13 - Multi-Use - $350
    • Trust Distribution Minutes Library for 2012/13 - Single-Use - $110
    • Trust Distribution Minutes Library for 2013/14 - Multi-Use - $350
    • Trust Distribution Minutes Library for 2013/14 - Single-Use - $110
    • Trust Distribution Minutes Library for 2014/15 - Multi-Use - $350
    • Trust Distribution Minutes Library for 2014/15 - Single-Use - $110
    • Trust Distribution Minutes Library for 2015/16 - Multi-Use - $350
    • Trust Distribution Minutes Library for 2015/16 - Single-Use - $110
    • Trust Distribution Minutes Library for 2016/17 - Multi-Use - $350
    • Trust Distribution Minutes Library for 2016/17 - Single-Use - $110
    • Trust Distribution Minutes Library for 2017/18 - Multi-Use - $350
    • Trust Distribution Minutes Library for 2017/18 - Single-Use - $110
    • Trust Distribution Minutes Library for 2018/19 - Multi-Use - $350
    • Trust Distribution Minutes Library for 2018/19 - Single-Use - $110
    • Trust Distribution Minutes Library for 2019/20 - Multi-Use - $350
    • Trust Distribution Minutes Library for 2019/20 - Single-Use - $121
    • Trust Distribution Minutes Library for 2020/21 - Multi-Use - $350
    • Trust Distribution Minutes Library for 2020/21 - Single-Use - $121
    • Trust Distribution Minutes Library for 2021/22 - Multi-Use - $350
    • Trust Distribution Minutes Library for 2021/22 - Single-Use - $121
    • Trust Distribution Minutes Library for 2022/23 - Multi-Use - $363
    • Trust Distribution Minutes Library for 2022/23 - Single-Use - $132
    • Trust Distribution Minutes Library for 2023/24 - Multi-Use - $363
    • Trust Distribution Minutes Library for 2023/24 - Single-Use - $132
    • Trust Distribution Minutes Library for 2024/25 - Multi-Use - $363
    • Trust Distribution Minutes Library for 2024/25 - Single-Use - $132
    • Unit Trust - $165
    • Unit Trust - Add New Member Kit - $110
    • Webinar On Demand - Foreign Trust Taxation Issues - $110
    • Webinar On Demand - Advising on Family Trusts in the 21st Century - $110
    • Webinar On Demand - AI in Professional Practices - Risks and Benefits - $110
    • Webinar On Demand - Drafting Estate Planning Documents to meet Litigation Risks - $110
    • Webinar On Demand - Employee Share Schemes - $99
    • Webinar On Demand - End Of Financial Year SMSF Planning 2025 - $110
    • Webinar On Demand - End Of Financial Year Tax Rollup 2025 - $110
    • Webinar On Demand - Family Law and Trusts - $110
    • Webinar On Demand - How Binding are Financial Agreements - $110
    • Webinar On Demand - Professional Advisers as Appointor of their Client’s Family Trust - $110
    • Webinar On Demand - Recent Changes in Family Law - $99
    • Webinar On Demand - Sexual Harassment Laws in Australia - $110
    • Webinar On Demand - Small Business Restructures and Director Penalty Notices - $110
    • Webinar On Demand - Tax & Family Trusts - $99
    • Webinar On Demand - Testamentary Trusts 101 - $110
    • Webinar On Demand - Trust Distributions and Section 100A - $99
    • Webinar On Demand - When Directors are Personally Liable - $110
    • Webinar On Demand - Where Death Benefit Nominations Go Wrong - $110
    • Will - Married or Defacto No Children - $95
    • Will - Married or Defacto with Children - $95
    • Will - Single No Children - $110
    • Will - Single With Children - $110
  • Bulletin

Top 3 Docs Quick Launch

Create New Company Create New Family Trust Create New SMSF

New Release

Trust Distribution Minutes Library for 2024/25 - Multi-Use
View Full Range

Join
it's free

Join Now Join Now

Need legal advice or a specially customised legal document?

Contact our partner law practice

Click here to arrange a quote

Support - Help is here

Support
help is here

  • FAQ
  • Enquire Online
  • Contact Us
Print Version Back

$1.6 Million Pension Transfer Balance Cap for SMSFs

Issue: 508 - Wednesday, 8 February 2017

In this Issue

  1. $1.6 Million Pension Transfer Balance Cap for SMSFs

1. $1.6 Million Pension Transfer Balance Cap for SMSFs

By Monica Rule

Now that the proposed $1.6 million pension transfer balance cap has been passed by Parliament and received Royal Assent, I thought I would explain how this law applies to SMSF members with superannuation pension accounts worth more than $1.6 million. 

Under this new law referred to as the “Transfer Balance Cap”, from 1 July 2017 every superannuation fund member is limited to $1.6 million in their pension account where the investment income is tax free. Members with amounts in excess of $1.6 million in their pension account are required to either retain the excess in the accumulation phase or withdraw the money as a lump sum benefit. Earnings accumulated in the pension account can remain if the account grows in excess of $1.6 million. However, if the pension account reduces, due to a poor investment performance, members will not be able to “top-up” their pension account back up to $1.6 million. 

The transfer balance cap is indexed in increments of $100,000 in line with the Consumer Price Index.  If an individual has not fully utilised this limit and chooses to transfer their funds, after an indexation increase has occurred, then they can use a percentage of the index increase based on what they have already used.

Amounts transferred in excess of $1.6 million to the pension account will be subject to an excess transfer balance tax where notional earnings on the excess amount will attract a 15% tax for breaches in the 2017/2018 financial year.  From 2018/2019, the tax rate is 15% for a first breach, and increases to 30% for second and subsequent breaches.  The notional earnings on excess capital are determined by the ATO based on the general interest charge (i.e. 90 day bank accepted bill rate plus 7%) calculated from the date the excess occurs, to the date the excess is rectified or the date the ATO issues a determination.  Transfer balance cap breaches of less than $100,000 at 30 June 2017 will be disregarded provided the breach is rectified within six months.

An individual’s transfer balance account is created by the Australian Taxation Office (ATO) when an individual first commences a pension.  If the balance exceeds the cap, the ATO will issue a determination to a member who has exceeded their transfer balance cap setting out the “crystallised reduction amount” which must be removed from their pension account.  The member has 60 days to elect which superannuation fund and pension account to deduct the crystallised reduction amount from, or to confirm that the excess has already been removed.  If the breach is not rectified, the ATO will issue a commutation authority to the chosen fund.  If the member does not notify the ATO then it will issue a commutation authority directly to the member’s SMSF.  If the SMSF fails to comply with a determination within 60 days then the pension will be deemed to not be in pension phase from the start of that financial year. A debt will also arise to the member’s transfer balance amount at the end of the period that the SMSF was required to comply with the commutation authority.

The transfer balance account operates in a similar way to a bank account, where amounts transferred to the retirement phase give rise to a credit, and amounts commuted or rolled out of the retirement phase give rise to a debit in the individual’s transfer balance account.  Earnings on assets supporting pension liabilities are ignored.  Credits and debits are not limited to any one superannuation fund account but capture all of a member’s superannuation accounts across all of their superannuation funds.

The following items count as a credit towards a member’s transfer balance account:

  • the value of all assets supporting pension liabilities on 30 June 2017
  • the capital value of new pensions commenced from 1 July 2017
  • the capital value of death benefit pensions at the time the individual becomes entitled to them (apart from reversionary pensions for children)

The following items count as a debit towards a member’s transfer balance account:

  • amounts commuted out of the pension account as lump sums (whether paid as a lump sum benefit, transferred to the member’s accumulation account or as a rollover to another superannuation fund)
  • structured settlement payments for personal injuries (amounts such as these, contributed to an SMSF can be used to commence a pension without affecting the member’s transfer balance cap)
  • where the pension balance is reduced by fraud
  • where the pension balance is reduced from a bankruptcy “claw back”
  • where the pension balance is reduced as a result of a family law split
  • where the pension ceases to be a complying pension (e.g. failing to pay the minimum pension payment – in which case, the full value of the pension at the end of the year will be a debit)

Ordinary pension payments or negative investment returns do not count as debit entries.

Transition to Retirement Income Stream

The Government has removed the tax exempt status from assets supporting a transition to retirement income stream (TRIS) effective from 1 July 2017.  The earnings from these assets will be taxed at 15%.  TRIS will not count towards the pension transfer cap as funds will remain in the accumulation phase. However, once a member receiving TRIS attains the age of 65 or has fully retired, TRIS will become an ordinary account based pension and the SMSF trustee will need to report the pension to the ATO.  From that point on, the pension will count towards the $1.6 million transfer balance cap and the earnings tax exemption will apply to the amount below the cap.

Transitional Capital Gains Tax Relief

The transfer balance cap measure includes a transitional Capital Gains Tax (CGT) relief via a cost base reset.  The relief is designed to ensure that only capital growth post 1 July 2017 is taxed. The CGT relief can only be claimed by SMSFs where there is at least one pension in place prior to 9 November 2016 (the date on which the legislation was introduced).

The relief only applies to assets held prior to 9 November 2016.  Any assets acquired after that date (even if acquired before 1 July 2017) will not be eligible for the cost base reset.  An asset must also have been held throughout the period 9 November 2016 through to 30 June 2017.  The reset can occur at any time during this period after the asset ceased being a segregated current pension asset or otherwise on 30 June 2017 if the unsegregated method is used.  Trustees can choose which assets they provide the relief to.  Trustees do not need to sell the asset to reset the cost base to apply the CGT relief.  However, the CGT relief is not automatic.  An SMSF will need to make an irrevocable election, in the ATO’s approved form, before the SMSF is required to lodge its tax return for the 2016/2017 financial year.

Also, where assets are partially supporting accounts in the accumulation phase, tax will be paid on this portion of the capital gain made to 30 June 2017.  This tax may be deferred until the asset is sold.  By electing to take up CGT relief, the SMSF will create a CGT event in the 2016/2017 financial year that flows through to a calculation of a potential CGT liability when the asset is eventually sold.  If the member decides to defer the payment of the tax bill until the asset is actually sold, even if they incur a loss in the future, this would not allow them to reduce the “locked in” tax liability up to the reset date. 

An SMSF trustee that chooses the CGT relief must wait a further 12 months before the SMSF can claim the CGT discount.  This is because of the deemed sale of the asset. 

The CGT relief applies differently depending on whether the SMSF segregates assets to support its current pension liabilities or whether it applies the unsegregated/proportionate method. 

Segregated current pension assets

An SMSF can only utilise the segregated method if the SMSF asset was segregated prior to 9 November 2016 and the asset ceased to be a segregated pension asset.  An asset can cease to be a segregated pension asset if a decision is made to switch to the unsegregated method prior to 1 July 2017.  Alternatively, the asset can be switched to accumulation mode prior to 1 July 2017. The criteria for the segregated method is:

  • Prior to 9 November 2016, a CGT asset of a fund is a segregated pension asset;
  • At a time during the period 9 November 2016 to 30 June 2017, the asset ceased to be a segregated pension asset;
  • The fund held the asset during this period; and,
  • The SMSF trustee makes a choice in the approved form before the lodgement of the SMSF’s income tax return for the 2016/2017 financial year.

If the above criteria is satisfied, then the SMSF is deemed to have sold and repurchased the asset immediately before 1 July 2017 at the asset’s market value for CGT purposes.  Under the segregated method, the entire capital gain is disregarded. 

Assets subject to the unsegregated/proportionate method

The criteria for the unsegregated method are:

  • The fund has unsegregated current pension liabilities in the 2016/2017 financial year;
  • The asset is held during the period 9 November 2016 to 30 June 2017;
  • The SMSF does not have any segregated pension assets during this period; and,
  • The SMSF trustee makes a choice in the approved form before the lodgement of its income tax return for the 2016/2017 financial year.

If the above criteria is satisfied, then the SMSF is deemed to have sold and repurchased the asset immediately before 1 July 2017 at the asset’s market value for CGT purposes.  As the SMSF is not entirely in pension mode, the notional capital gain on the non-exempt proportion is added to the SMSF’s taxable income for the 2016/2017 financial year.  The SMSF can, however, defer the notional capital gain that relates to the non-exempt portion until the asset is sold. 

For Gold and Platinum members, please read on for information on how the death of an SMSF member may affect the transfer balance cap of the deceased’s spouse or their children.

Platinum Members, click here to view content

Webinar

In the May 2016 Federal Budget, the Government announced significant changes to superannuation.  Monica Rule will explain three of these major changes. Changes to concessional contribution limits, non-concessional contribution limits and limits on pension accounts will have a big impact on individuals with superannuation balances of more than $500,000 and superannuation pensions worth more than $1.6 million.  As the changes will now take effect from 1 July 2017, SMSF trustees and professionals need to understand these changes so that they can put effective plans in place before 30 June 2017.

In this one hour webinar, Monica will use various scenarios to explain the new laws as well as things to consider when determining the best course of action for SMSFs to mitigate any negative outcomes. To register for the Webinar click here.
Monica Rule is an SMSF Specialist and author of The Self Managed Super Handbook – Superannuation Law for SMSFs in plain English www.monicarule.com.au

Disclaimer: The content of this Bulletin is general information only. It is not legal advice. The statements and opinions are the expression of the author, not Law Central, and have not been checked for their accuracy, completeness or changes in the law. Law Central recommends you seek professional advice before taking any action based on the content of this Bulletin.

Related Documents:

  • Self Managed Superannuation Fund
  • SMSF - Deed Update
  • Pension Pack for Self Managed Super

Related Webinar:

  • Webinar - Understanding the 2017 Superannuation Changes


  • Legal Documents Online
  • Trust
  • Superannuation
  • Estate Planning
  • Commercial
  • Employment
  • Company
  • CPD Webinars
  • All Documents
  • Price List
  • Join Us
  • Join for Free
  • Memberships
  • About Law Central
  • About Us
  • * Our Guarantee
  • Printing and Binding
  • Site Map
  • Terms and Conditions
  • Privacy Policy
  • Disclaimer
  • Support
  • FAQ
  • Contact Us
  • Feedback
  • Connect
You should follow us on Twitter Subscribe to our RSS feed Follow us on Linked In Subscribe to our Legal Bytes channel

Copyright © 2000-2025 Law Central Co Pty Ltd ABN 98 091 824 225
Site Map | Terms and Conditions | Privacy Policy | Disclaimer