To obtain an actuarial certificate, there are things that should be taken into consideration. After getting one, there is another matter which concerns tax compliance and how to maintain it. SMSFs’ deducted by various things but the biggest single contributor to this deduction is the ECPI or exempt current pension income. For SMSFs to claim this substantial deduction, actuarial certificates are needed. By now, it is known to many trustees that tax compliance must be done right and properly if they don’t want to get in to trouble. Things must be accurate and tax-exempt income must not be overstated.
Actuarial certificates are not needed when claiming ECPI especially if the funds are already in the pension phase but there are unique cases where these certifications are required by the ATO. Members of the SMSF who transitioned in the pension phase in a certain financial year may claim an income tax exemption depending on the assets that is connected with the pension liabilities. Trustees under SMSF that are almost into retirement may benefit when moving to retirement pensions in order to add to their current income while the fund is still being contributed by them. Certification is important especially in funding where there are members in the pension phase and also in the accumulation. If an asset is not the only source of pension funds then a part of the income can still be included as an exemption from taxes.
The actuary will make a summary of calculation based on various matters such as the financial information regarding the fund, the contributions size and the timing, payments for pension, withdrawals of the lump sum, commutations and the commencement of the pension in order to point out what part of the fund are the pension liabilities. Exemption may be claimed as long as it can be proven that the pension fund meets the minimum standard for pension.
An actuary must know the exact information regarding fund’s transaction before applying for an actuarial certificate. ATO has already expressed its views regarding ECPI deduction and it was fully scrutinized since last year 2014 to make sure all claims are accurate.