Tax Exemptions On Pension Assets

Are you a director or super self-managed funds? Did you know that the IRS has published a guide explaining how self-managed pension funds can apply for a tax exemption on income earned retirement assets?

Self managed pension funds (SMSF) may be exempted from tax once the funds start to pay pensions. In general, ordinary income and statutory income earned by a pension fund assets held to ensure pensions are exempt from income tax.


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This income is exempt current pension income called (ECPI) and can be worked using two methods:

A. Distinct Method:

This method is used if the assets with the sole purpose of paying pensions can be set aside and the income they generate can be identified specifically.

Also, a cost certificate may be required before the annual return filing date as proof of these SMSF assets and income on it are sufficient to pay pensions when they are due.

B. Method not distinct:

Under this method, a tax exemption can be claimed based on the average value of the SMSF annual pension obligations concerning its average value of pension liabilities.

An actuarial certificate is required to calculate the current exempt retirement income under this method.

For a copy of the guide or more information please visit the website Australian Taxation Office.