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Re: Transition to Retirement (TTR) Income Tax for person over 60 , but less than 65

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Initiate Registered Tax Practitioner

Views 321

Replies 1

Person over 60 , but less than 65, had one release from TTR in financial year. Person wants another release but would end up being more than 10% for the financial year.

 

What are income tax implications for amount up to 10% and the amount over 10%?

 

Thankyou

1 ACCEPTED SOLUTION

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Best answer

Devotee Registered Tax Practitioner

Replies 0

 

What are income tax implications for amount up to 10% and the amount over 10%?

 

Assuming TTR is 100% preserved, paying more than 10% means TTR deemed to cease at the start of that year, and the whole amount is illegal early release.

 

See:

  • Paying more than the maximum annual pension payment limit

    If a member has only restricted non-preserved benefits or preserved benefits as part of their TRIS, exceeding the maximum annual pension payment limit will be a breach of the super laws as the fund has not adhered to the cashing restrictions that apply to a TRIS.

    As trustee, you need to be aware that if you exceed the maximum annual pension payment limit for a year in such circumstances:

    • we may make your fund non-complying and penalise you as trustee
    • the TRIS ceases for income tax purposes at the start of that income year.
    • the member's account balance is no longer seen as supporting a TRIS and any payments made during the year (not just the amount in excess of the limit) will be super lump sums for income tax purposes and lump sums for SIS Regulations purposes
    • the lump sum payments are included in the member’s assessable income and are taxed at marginal rates, without any tax offsets. (the payments are treated as early access to the member's super benefits and a breach of the SIS payment standards).
     
    Last modified: 22 Mar 2019      QC 42388
 
1 REPLY 1
Highlighted

Best answer

Devotee Registered Tax Practitioner

Replies 0

 

What are income tax implications for amount up to 10% and the amount over 10%?

 

Assuming TTR is 100% preserved, paying more than 10% means TTR deemed to cease at the start of that year, and the whole amount is illegal early release.

 

See:

  • Paying more than the maximum annual pension payment limit

    If a member has only restricted non-preserved benefits or preserved benefits as part of their TRIS, exceeding the maximum annual pension payment limit will be a breach of the super laws as the fund has not adhered to the cashing restrictions that apply to a TRIS.

    As trustee, you need to be aware that if you exceed the maximum annual pension payment limit for a year in such circumstances:

    • we may make your fund non-complying and penalise you as trustee
    • the TRIS ceases for income tax purposes at the start of that income year.
    • the member's account balance is no longer seen as supporting a TRIS and any payments made during the year (not just the amount in excess of the limit) will be super lump sums for income tax purposes and lump sums for SIS Regulations purposes
    • the lump sum payments are included in the member’s assessable income and are taxed at marginal rates, without any tax offsets. (the payments are treated as early access to the member's super benefits and a breach of the SIS payment standards).
     
    Last modified: 22 Mar 2019      QC 42388