ATO provides clarity on treatment of excess pension payments

The SMSF Association has sought clarity from the ATO and they have confirmed that pension payments made up to 24 March 2020 (the date of the Government’s announcement) in excess of the new reduced minimum annual payment will be treated as pension payments in 2019/20 and cannot be treated as lump sums.

More importantly, the ATO have confirmed that this treatment also applies where a valid election was in place as far back as 1 July 2019, requesting that the trustee treat any payment over the minimum pension amount required for the year as a lump sum. In this situation, only payments made to a member, after 24 March 2020, in excess of the reduced minimum annual pension drawdown, can be treated as a lump sum. The need to ensure that a valid election from a member is in place prior to the payment of any lump sum is still required.

Source: Self Managed Super Fund Association

Read the full article here