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I have audit a fund to audit where Member 1 passed away in October 22 and Member 2 passed away in June 23.
The fund was running two ABPs and one MLP. The 2023 min pensions in total were $150,380 and the pension amount taken was $117,319 - $33,060 or 22% short.
Pensions for member 1 were both reversionary.I believe in this case that would mean member 2 would then be required to take the minimum pension that would have applied to member 1.
Given the minimum pension wasn't withdrawn what is the tax status implication for the fund even though both members have died and what is my reporting obligation as auditor? The accountant obviously wants to maintain the tax free status for 2023 and 2024.
Hi Ross
My view is that the Fund should keep the pension status & the ECPI (exempt current pension income) re the pension accounts for the 2022/23 year.
If a pension is a reversionary pension the pension payable for the year of death is based on the deceased person's date of birth for the year of death (& is then payable in the following year based on the reversionary beneficiary's age).
As the reversionary beneficiary has passed away in June 2023 there would be no minimum pension payable in the 2022/23 year as no minimum pension is required in the year of death of a member.
The ATO states at:
https://www.ato.gov.au/misc/downloads/pdf/qc59673.pdf
"Generally a superannuation income stream ceases when the member dies. As a result, the requirement for the self-managed super fund (SMSF) trustee to make periodic superannuation income stream benefit payments comes to an end and we won't require a minimum pension payment to be made in the year of death."
The tax act allows the Fund to keep receiving ECPI in relation to the pension accounts until the deceased members benenfits have been paid out as a lump sum or as a pension to their dependants.
Further as a result of the above comments you should have no reporting obligations in relation to the calculated minimum pension not having been paid in the 2022/23 year.
Thanks
SMSF AAA