Actuarial Certificate

 An actuarial certificate is a record developed by a certified actuary. These certificates affirm the proportion of a self-managed superfund’s (SMSF) earnings that were developed during the fund’s accumulation stage, and how were developed during the retirement stage.

An actuarial certificate is a record prepared and allocated by an actuary to oblige the trustees of an elderliness fund in relation to the management of the fund.

When is an actuarial certificate required?

In the context of SMSFs, commonly, an actuarial certificate will be needed when the SMSF claims ECPI in respect of:

  • Retirement phase pensions using the proportional strategy under section 295-390 of the Income Tax Assessment Act 1997 (ITAA 1997), or:
  • Described benefit retirement pensions using the segregated process under section 295-385 ITAA 1997.

An Actuarial Certificate is required when a superannuation fund is spending pension during the ‘retirement phase’ and when there are also non-pension accounts in the fund. The certificate itself is a lawful document that expresses the proportion of a superannuation fund’s income that is excused from tax.

If you are not intending to claim any tax advantages, an Actuarial Certificate is not a legal requirement. However, if you want to declare a ratio of your superannuation fund’s earnings as a tax benefit, then an Actuarial Certificate will be necessary.

How Actuarial Certificates Work;

Once you attain preservation age, you can access your elderliness benefits and transform your balance in super from the accumulation phase to the pension phase. To change your superannuation advantage to the pension phase means a whole lot of records need to be accomplished by the member including a pension contract.

When do you require to apply for an Actuarial Certificate?

You need an actuarial certificate before you can design the SMSF Annual return for the income year. Once the income tax return is designed with the correct claim of ECPI, you will require to get the fund audited before lodging the return with ATO. The auditor must review that ECPI is accurately evaluated and documented.actuarial certificates

SMSF income tax return form demands you to declare all income of the fund; however, you can claim exempt pension income as a deduction to arrive at the taxable income of the fund. Note that contributions are always taxable and if there is any particular income (such as connected party dividends) it cannot be exempted.

When an actuarial certificate is not  needed;

The fund does not plan to declare an income tax exemption for the income supporting a pension

The assets of the fund are fully segregated for the entire year into pension and non-pension assets.

How much time is required  to proceed with an actuarial certificate;

In most circumstances, once the appropriate information has been received, your actuary can deliver an Actuarial Certificate in less than 24 hours.

An Actuarial Certificate must be designed by a registered Actuary as it is not lawfully possible for ESUPERFUND to prepare this paper for clients. The Actuarial charge for ESUPERFUND clients is $129. The Actuarial Fee is payable yearly only if required.

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