We have partnered with McGing Actuarial to develop a quick and easy online system so you can have your Actuarial Certificate SMSF completed. You can use this as a standalone service or bundled with your SMSF Administration service.
The process saves you time and does away with unnecessary information gathering. The system requires only the information that materially impacts the final calculation:
Pension account balance and dates
Major cash flows
As you will see from the following explanations, this is a tricky part of SMSF pensions administration and is probably best left to the experts.
What Are Actuarial Certificates SMSF, and Do You Need One?
An actuary prepares the actuarial certificate. It considers the source of the fund’s earnings for the financial year: i.e., from the accumulation or retirement phases.
It’s essential to separate the two, as earnings from the retirement phase have a tax exemption – the so-called exempt current pension income (ECPI).
An SMSF needs the certificate to claim the ECPI in its annual tax return.
Who Does NOT Need An Actuarial Certificate?
Self-managed super funds do not require an actuarial certificate if:
All members were in the accumulation phase for the entire financial year
All members were in the retirement phase for the whole financial year, even if they had disregarded small fund assets.
The second condition is new and applies only from the 2021-22 financial year when funds submit their 2022 tax returns.
Changes To Actuarial Certificate Requirements For SMSFs
There were changes to Treasury Laws in September 2021. They apply to funds that are entirely in the retirement phase.
Previously, funds with “disregarded small fund assets” needed an actuarial certificate, and they needed to use the proportionate method to calculate their tax position. This happened if:
The fund had at least one retirement phase income stream during the year
Any fund member had a total super balance (TSB) at the start of the year of at least $1.6 million (TSB includes all super interests in any fund, not just the SMSF), and
The member with the TSB of at least $1.6 was in receipt of a retirement phase pension during that year
Now, SMSFs with only retirement phase pensions for the entire year and paying only account-based pensions do not need the certificate.
There is an exception:
Even if all members are entirely in the retirement phase, an actuarial certificate will be required if assets and earnings are greater than estimated liabilities at any stage during the year.
Who Needs an Actuarial Certificate and When Must You Get It?
A combination of accumulation and retirement phases
An SMSF needs an actuarial certificate if there was a balance in both the accumulation and retirement phase accounts at any point during an income year, and investment income was allocated to both.
There can be multiple changes during a financial year, with members moving from the accumulation to the retirement phase.
The dates of these changes are important.
Income up to the date of conversion from accumulation to retirement phase is taxable.
You can claim tax exemption from the date that the SMSF starts paying “retirement-phase income streams” – or “pensions.”
An SMSF will require an actuarial certificate only for the portion of the year when there were mixed assets, and only for the income that was received during that time.
Lifetime or life expectancy ATE income stream
Some SMSFs have lifetime or life expectancy ATE (asset-test) income streams and may require actuarial certificates.
Please note that the SMSF Engine actuarial certificate only caters for account-based pensions.
How many actuarial certificates do you need?
Only one actuarial certificate is required each year. It must reflect all changes and significant cash flows for the year.
Major cash flows include such things as:
Rollover from another superannuation fund
Transfer of pension account to another superannuation fund
This cost equates with the mid-cost in the Price Warner analysis of actuarial fees (Table 4). The research found a range of fees from $110 to $285.
When we prepare the accounts, our staff will input the data directly into the system to produce the certificate on your behalf. The accounts will be completed using the certificate’s results, and you can download the certificate for your records
Standalone Actuarial Certificate
Even if you don’t require us to prepare your financial statements, you can take advantage of our Actuarial Service, and generate a DIY certificate. You can input the data directly into the online actuarial form. It only takes a few minutes, and the actuarial certificate is quickly available for download. The cost of this DIY certificate is $143.