What Is an Actuarial Certificate and When Is It Needed?

Regulated by the Australian Taxation Office (ATO) the SMFS (Self-Managed Super Fund) represents a legal structure that provides financial benefits to its members in retirement. This type of super fund enables you to mange your retirement funds and keep track of your investments. Before you start receiving pension from your super fund you should first understand the tax laws and requirements that apply for SMSFs. Although most trustees are aware of the fact that once they begin to receive their pension from the fund the investment income is tax free, they are often unfamiliar with the rules and requirements that actually make the super fund tax free. There are various factors that make the SMSF entitled to tax exemption and in this article we will go through everything that is required for your super fund to comply with the rules set by the Taxation Law.

Obtaining an actuarial certificate SMSF document is one of the rules for making the pension income tax free. It is important for trustees to understand what this document is and its main purpose. Let’s take a look at the actuarial certificate SMSF principles and see what you need to know before you obtain this document.

Actuarial Certificate SmsfSuper funds that combine both accumulation assets and pension need a certificate for tax-exempt percentage which is known as an actuarial certificate. You will need a qualified actuary that has the required knowledge and expertise to provide and prepare your certificate. Plus, he will require important information for your super fund in order to properly prepare the certificate. Besides details about every pension payment, the actuary will also need information about all the contributions to the fund made during the entire year.

After all the calculations are made the certificate will show the final percentage of the SMSF income that is going to be freed from tax payments for the period of one year. The annual certificate serves as a confirmation document that your SMFS is managed and operated in accordance with the regulations and conditions of your pension. There are various scenarios where trustees should obtain the actuarial certificate:

  • When the super fund consists of only one member who receives pension from the fund and makes contributions to the SMSF during the whole year.

  • When the super fund consists of two members where one member is in the accumulation process and the other is already using pension funds.

  • When the member starts to receive pension from the fund mid way through the financial year.

  • When the SMSF consists of two members both receiving pensions and one of the trustees decides to start a new pension by making one large contribution to the SMSF.

Mia Hadson

Mia is a passionate blogger. Her obsession with beauty, health and shopping started young. Her philosophy is based on simple things, regardless of whether it is about applying makeup, decorating a room or cleaning a home. She believes simplicity is the basis of beauty and she implements this ideology in all spheres of her life.