SMSF lent to the member in FY 2023. In 2024, the member wants to show this amount as a pension payment. Instead of paying back the loan amount to SMSF and taking the money out as pension payment, they want to adjust the loan amount in FY2024 as a pension payment just by passing a journal entry.
The ATO states that pension payments are recorded on a 'cash' basis. This means that the payment amount must leave the SMSF's bank account for that payment to be recorded as paid.
Hi Rashmi
Yes I agree with you. Pension payments must be paid from the bank account to be able to be pension payments.
Taking up a journal entry is not going to allow the debit entry to be treated as a pension payment.
Thanks
The Auditors Institute