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SG-2020(Enthusiast)Enthusiast
22 Nov 2023

I have SMSF in Pension mode, fully retired and self-funded retirees over 70years of age. SMSF under Corporate Trustee.


I have heard that after I have drawn pension for the FY, I can draw a lump sum from SMSF as Partial Commutation and I am able to return the lump sum drawn as Partial Commutation back to my SMSF without impacting my SMSF be it Transfer Balance Cap or non-concessional contribution – is that correct ?.


Example – SMSF Balance $1.2M in pension phase. Pension drawn 5% = $60k for the FY. Then withdrawing as Partial Commutation of $100K. Planning to return the $100K about 6 months or so later back to the SMSF.


Also what documentation is required for the ATO purpose ?

Thanks

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501 views
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Most helpful reply

Bruce4Tax(Taxicorn)Taxicorn
22 Nov 2023

I can draw a lump sum from SMSF as Partial Commutation and I am able to return the lump sum drawn as Partial Commutation back to my SMSF without impacting my SMSF be it Transfer Balance Cap or non-concessional contribution – is that correct ?.


Depends what you mean by without impacting


If you are under age 75, and have not exceeded contribution cap, then amount can be re-contributed - but into accum account.


You would need to start a new pension on the same day as the contribution if you want fund earnings to remain tax free.


Also what documentation is required for the ATO purpose ?


  1. Request LSP from SMSF - specifying which pension account (if more than one)
  2. Pay the amount
  3. Lodge TBAR form to ATO
  4. Make contribution
  5. Same day - Request new pension to be started with contribution
  6. Trustee minute to confirm pension details + letter to member
  7. Lodge TBAR to ATO.

Advice, other than tax and admin, on LSP, contributions, and pensions, can only be provided by the holder of an AFSL.


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Most helpful reply

Bruce4Tax(Taxicorn)Taxicorn
22 Nov 2023

I can draw a lump sum from SMSF as Partial Commutation and I am able to return the lump sum drawn as Partial Commutation back to my SMSF without impacting my SMSF be it Transfer Balance Cap or non-concessional contribution – is that correct ?.


Depends what you mean by without impacting


If you are under age 75, and have not exceeded contribution cap, then amount can be re-contributed - but into accum account.


You would need to start a new pension on the same day as the contribution if you want fund earnings to remain tax free.


Also what documentation is required for the ATO purpose ?


  1. Request LSP from SMSF - specifying which pension account (if more than one)
  2. Pay the amount
  3. Lodge TBAR form to ATO
  4. Make contribution
  5. Same day - Request new pension to be started with contribution
  6. Trustee minute to confirm pension details + letter to member
  7. Lodge TBAR to ATO.

Advice, other than tax and admin, on LSP, contributions, and pensions, can only be provided by the holder of an AFSL.


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