When does an SMSF need/require an actuarial certificate?

There is often confusion around when an actuarial certificate is or isn’t needed for your SMSF. This article tries to clear up some of that confusion.

First we will start by covering an important question – what is an actuarial certificate?
This is a certificate used when you start drawing your pension, that determines what percentage of income from your SMSF will be exempt from tax and what will be taxed at the usual rate (15%).

There are many instances in which an actuarial certificate is needed by your SMSF and so it’s a little easier to cover the occurrences where one is not required. This can be determined by the following:

  • When all members of the SMSF are drawing a pension within that financial year
  • When the members of the SMSF are in segregation – i.e. when they each hold separate bank and investment accounts – this can happen in family SMSFs where the younger generation keeps money separately from the pensioner parents.
  • When your SMSF is running at a taxable loss.
  • When your SMSF is running purely in accumulation mode – no one is taking a pension within the financial year.
  • When a contribution is made to the SMSF but immediately used as pension and not as accumulated fund (i.e. it has not earned any interest in the SMSF).

In light of the above we can look at examples where they do NOT fall into these instances, meaning an actuarial certificate will be required.

For example, most SMSFs are run with pooled assets – meaning there is only a shared account. As such, the majority of the time there is a need for an actuarial certificate.

When pensions were started part way through a financial year, an actuarial certificate will be required. And if a segregated fund becomes un-segregated during the financial year, then an actuarial certificate will be required then too.

It could be said that an actuarial certificate requirement will be avoided by running segregated funds but this can create much more manual work and be drain on time and resources running your SMSF.

Finally, it should be noted that when your SMSF does require an actuarial certificate it must be prepared by a qualifying actuary.

Disclaimer: This information should not be considered personal financial advice as it is intended to provide general advice only. This factsheet has been prepared by Superhelp Australia Pty Ltd without taking into account your personal objectives, financial situations or needs. The information contained in the fact sheet may not be appropriate to your individual needs, therefore, you should seek personal financial advice before making any financial or investment decisions.

Book Your Free SMSF Consultation

Book your free consultation with me to find out if SMSF is right for you. If you have any other questions, we are happy to help!

 

Sandra - SMSF Advisor

15 + 13 =

Can SMSF Lend Money to a Third Party?

Introduction: Navigating the complexities of Self-Managed Super Fund (SMSF) regulations is crucial for trustees who aim to maximize their fund's potential while remaining within the legal framework set by the Australian Taxation Office (ATO). A common question that...

Can SMSF Lend Money?

The Rules and Opportunities around SMSF lending Self-managed super funds (SMSFs) offer Australians a unique way to control their retirement savings, but with great power comes great responsibility, including understanding the legalities and regulations surrounding...

Can SMSF Borrow Money? Exploring the Possibilities and Limitations

Self-Managed Super Funds (SMSFs) have become a popular choice for Australians looking to take control of their retirement savings. As trustees seek to maximize their fund's potential, a common question arises: Can SMSF borrow money? The answer is yes, but it's wrapped...

What Does SMSF Stand For? A Deep Dive into Self-Managed Super Funds

When it comes to planning for retirement, Australians have a variety of superannuation options available to them. Among these, one option stands out for those who seek more control over their retirement savings: the Self-Managed Super Fund (SMSF). But what exactly...

How much do you need to retire in Australia?

Retiring in Australia can be a dream come true, but it's important to have a clear understanding of how much money you will need to support yourself during your golden years. The amount you need to retire in Australia depends on several factors, including your...

SMSF Director ID

The SMSF (Self-Managed Super Fund) Director ID is a unique identifier that is assigned to individuals who act as directors of SMSFs. This identifier is used to monitor and regulate SMSF trustees and ensure that they are fulfilling their obligations under the...

What types of people have an SMSF?

There are many different types of people who have an SMSF. Some of the most common include: Small business owners: Many small business owners choose to set up an SMSF to help manage and invest their retirement savings. This allows them to have more control over their...

Commercial SMSF Loans – What you need to know

Securing a commercial loan for an SMSF can be complex due to the variety of lenders and options available. Whether you're a first-time borrower or an experienced borrower, it's important to understand the nuances of the loan process when applying for a commercial SMSF...

Is SMSF right for you?

Before deciding to set up an SMSF, it is important to consider whether it is the right choice for you. An SMSF is a type of superannuation fund that is run by its members, who are also the trustees. This means that the members have complete control over the investment...

How to Complete Your SMSF Tax Return

SMSF trustees are responsible for managing their own superannuation funds, which means they are also responsible for ensuring that their SMSF complies with all the relevant laws and regulations. One of the most important compliance requirements for SMSFs is the...

Contact Us

SuperHelp is located in Macquarie Park, NSW however we work with clients all around Australia.

info@superhelp.com.au

1300 736 453

PO Box 1906 Macquarie Centre NSW 2113

M-F: 9am-5pm, S-S: Closed

10 + 2 =