SMSF receives ATO Letter from a member advising release of $10,000 on Compassionate Grounds relating to medical expenses (not Covid related)
Member under 60 and lets say PAYG of $1,000 is payable.
- Does the Fund release the $10,000 and pay the $1,000 PAYG also (essentially $11,000)
No - if $ 1,000 needs to be witheld from $ 10,000 = net payment is $ 9,000.
Actual tax depends on member's preservation age, and the fund's tax components.
- Does the Fund pay the $10,000 and the member has to pay the $1,000 PAYG on behalf of the Fund.
No
- Alternatively, does the Fund pay out the net of $9,000 to the member and 'retain' $1,000 to cover the PAYG.
Yes, as above.
Also - lets say the $10,000 was a quote and the total expenses were only $9,500?
- If the member took a $10,000 lump sum is that an issue?
Not an issue if you have an ATO release for $ 10K
- If the member paid multiple invoices from the Fund bank account instead of taking a single lump sum - is that an issue?
Yes - money should be paid to member, who the uses it to pay medical bills as incurred.
