Lifetime and life expectancy pensions
Just prior to the Christmas break the tax and super laws were amended to relax the commutation restrictions for anyone receiving a defined benefit pension from SMSFs and other small funds. Defined benefit pensions include lifetime pensions, life expectancy pensions and market-linked income streams. It will be possible for anyone receiving one of these pensions to transfer the balance of the pension to their accumulation phase account to commence a new account-based pension, leave it in accumulation phase or withdraw it as a lump sum as they wish. The relaxed rules apply for five years and end in December 2029.
The $3 million super balance tax
Late last year Division 296 tax legislation was debated in the House of Reps to impose an additional tax on annual increases in a person’s superannuation balance above $3 Billion. This is controversial as the proposed law taxes unrealised capital gains in superannuation on a year-by-year basis. The proposed legislation is now on hold in the Senate, so it will be interesting to see what happens.
Review of NALI Tax Rulings
In November 2024 the ATO issued proposed changes to Tax Ruling 2010/DC2 which is about superannuation contributions and Law Companion Ruling 2021/2DC about non-arm’s length income and expenses in superannuation funds. Submissions on the proposed changes were required by 24 January this year and have been made by the major accounting, financial planning and superannuation associations.
Increase in the Transfer Balance Cap from 1 July 2025
The increase in the CPI figure to 139.4 for the December 2024 quarter means that from 1 July 2025 the Transfer Balance Cap will be $2 million. This will allow anyone to use up to $2 million of their superannuation if they are commencing a pension for the first time. There will also be an increase in the Total Superannuation Balance which will increase the threshold for purposes of the bring forward three-year non-concessional contributions rule. It should be noted that there is no increase in the current concessional and non-concessions contributions caps for the 2025-26 financial year.
Plan to combine accounting and assurance standards bodies
Treasury has released its plans to combine the Australian Accounting Standards Board (AASB), Auditing and Assurance Standards Board (AUASB) and the Financial Reporting Council (FRC) into a single organisation.
The proposed change is to recognise a wider range of environmental, social and governance risks due to shifts in global financial reporting practices relating to accounting, auditing and assurance, and sustainability.
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