Additional Documentation Required from Self Managed Superannuation Funds and Small APRA Funds

Last amended: 10 March 2011

Documentation required to ensure ATE compliance for SMSFs and SAFs

In addition to the income stream schedule, a self managed superannuation fund (SMSF) or small APRA fund (SAF) must supply the following documentation to determine whether an income stream is an asset test exempt income stream[glossary:.:]:

• a copy of the trust deed,
• a copy of the contract or other documentation under which the income stream is paid from the SMSF or SAF to the member,
• if the fund has purchased an annuity to fund the income stream, a copy of the contract for the annuity, verifying compliance with the VEA,
• documentation describing the indexation rate of the income stream and whether indexation is guaranteed,
• for lifetime and life expectancy income streams (except where the SMSF or SAF has purchased the income stream from a life office to directly fund the income stream to the member), an actuarial certificate prepared in accordance with the Institute of Actuaries Australia's Guidance Note 465, and    
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• any other relevant documents or agreements setting out the conditions of the income stream.

Expiration of actuarial certificate

Actuarial certificates are valid for one year, ending on 30 June. The first actuarial certificate issued for an income stream will be valid for the period between the commencement day and 30 June. When the actuarial certificate expires, a 26 week grace period applies, during which, the income stream retains asset test exempt status. If a new certificate has still not been supplied at the end of the grace period, the income stream is reassessed as if it had never been asset test exempt. Any resulting overpayment should be recovered under existing policy.     

Actuarial certificate does not express a positive opinion

If the actuarial certificate does not express a positive opinion (or a high probability that the fund will be able to meet the income stream payments required) under Guidance Note 465, the income stream will retain asset test exempt status for 12 weeks to allow time for the income stream to be rolled over to a new asset test exempt income stream, or in the case of an error in the certificate, to obtain a new certificate expressing a positive opinion.

If no action is taken, the income stream will lose its asset test exempt status and become asset tested at the end of the 12 week period. The pensioner will be assessed as if the income stream never had asset test exempt status from the commencement day. This may result in a debt being raised.     

Temporary debt relief where actuarial certificate does not express a positive opinion

In recognition of the global financial crisis of 2008 and 2009, temporary relief has been provided for holders of 100% asset test exempt income streams sourced from a SMSF or SAF who fail to meet the high probability test.