Pensions paid by SMSFs must meet certain minimum standards in order to qualify for various tax concessions. One of the most significant is that a minimum dollar amount of pension payments must be made each financial year. The amount is expressed as a percentage of the balance of the pension account at the start of the financial year, which varies with the age of the member receiving the pension. If the pension commenced during the year, the commencing balance is used and the required minimum payment is pro-rated according to the number of days during the year the pension was in existence.
The minimum percentages were reduced by 50% in the 2019/20 financial year in response to the effect of COVID-19 on returns of SMSFs. This reduction was extended into the 2020/21 and 2021/22 years. The Federal Government has announced that the 50% reduction is also to apply in the 2022/23 year. As a result, the minimum percentage pension factors in the 2021/22 and 2022/23 years to be applied to the balance of the pension account at the beginning of the financial year are:
Please contact your Nexia Edwards Marshall advisor if you require any further information on this matter.
The material contained in this publication is for general information purposes only and does not constitute professional advice or recommendation from Nexia Edwards Marshall. Regarding any situation or circumstance, specific professional advice should be sought on any particular matter by contacting your Nexia Edwards Marshall Adviser.