The government has confirmed the need for an actuarial certificate to claim exempt current pension income (ECPI) when the assets of an SMSF are not segregated, with the release of the Treasury Laws Amendment (Fair and Sustainable Superannuation) Regulations 2017 in late March.
This is in contrast to the superannuation legislation passed last November that suggested a certificate was not required for an ECPI exemption which left uncertainty over the importance of these documents in the future.
This latest development has been applauded by SMSF industry executives who have labelled the move a positive outcome for the sector’s integrity.
“I think the government has come to a very sensible decision, which will mean the integrity in the system will be maintained by having actuaries overseeing these calculations,” Lime Actuarial director Greg Einfeld told selfmanagedsuper.
“Keep in mind that there’s nearly $20 billion of ECPI claimed every year, so having trusted professionals, such as actuaries, overseeing that can only be a good thing. “And trustees and accountants will continue to have access to actuarial certificates that are low cost and easy to obtain, so everybody should be pleased with the outcome.”
Einfeld said the original draft legislation proposal received strong pushback from the sector.
“It was almost unanimous from a cross-section of industry bodies, accountants, auditors, other interested parties and, of course, actuaries that it would be a big mistake to remove the actuary’s role in performing that calculation,” he said.
“And Treasury has obviously taken on board that overwhelming feedback and has decided to leave actuarial certificates in place.” He added the proposal to remove actuarial certificates was perhaps based on flawed assumptions made by Treasury.
According to Einfeld these included misconceptions about the cost to produce an actuarial certificate, the time and effort involved in obtaining a certificate, and how easy it would be for service providers other than actuaries to produce these documents.
“It was possible that Treasury had received feedback that perhaps it was possible to perform ECPI calculations in a very straightforward manner and that feedback has proven to be incorrect,” he said.