• JCMB Consulting

    Self-managed Superannuation Fund Audit and Consulting Services

     

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  • JCMB Consulting

    Trusted, Experienced, Professional - Superannuation Services in Inverloch

     

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The main advantage of paying a transition to retirement income stream (‘TRIS’)  is that a  TRIS (unlike a standard account based pension (‘ABP’)) can commence to be paid as soon as the member has reached their preservation age, even if the member is still working.

However, the disadvantage of paying a TRIS is that, unlike an ABP, a TRIS is subject to a maximum annual draw down limit, which is basically 10% of the member’s pension account balance as at 1 July (or the commencement day of the TRIS for the income year in which the TRIS commences).

This 10% maximum annual limit should be observed when paying a TRIS, because if this limit is exceeded in any income year, then the following key consequences will arise:

  • Pension entitlements rolled-back to accumulation phase – the member’s pension interest (or capital) is effectively “rolled-back” into accumulation phase, and the tax-free and taxable components of the member’s accumulation entitlements would need to be effectively recalculated (according to the type of benefit subsequently paid from the fund).
  • Tax treatment of benefit payments – Any benefits paid to the member during the year will generally be fully assessable to the member and taxed at their marginal tax rates (e.g., any payment made to a member aged 60 or more will not be tax free as it otherwise would be under the superannuation legislation).

The above consequences are similar to those that arise where an SMSF fails to pay the correct minimum annual pension amount (for an ABP or a TRIS).

Once a member receiving a TRIS satisfies another condition of release (such as ‘retiring’ for the purposes of the superannuation legislation or reaching the age of 65), the 10% payment limit restriction (and the commutation restriction) that normally applies to a TRIS ceases to apply.

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JCMB Consulting Pty Ltd
PO Box 480, Inverloch, VIC 3996


 
ABN 86 768 265 615
Michele Beattie – Principal


C.A., B. Commerce (Melb), Approved SMSF Auditor / SMSF AUDITOR NUMBER - 100 087 330


Liability limited by a scheme approved under Professional Standards Legislation

Michele Beattie is an Authorised Representative No. 001242630 of the SMSF Advisers Network Pty Ltd - ABN 64 155 907 681
An Australian Financial Services Licensee - AFSL No 430062 - http://www.smsfadvisersnetwork.com.au
JCMB Consulting is a Corporate Authorised Representative No. 001242634