Do You Need an Actuarial Certificate For Your SMSF?

1 Dec 2016
Larry Ficks

SMSF has become really popular among Aussies. It’s the fastest growing component of Australia’s super system, which shows that people seem to have a lot of faith into it and the numbers are proving it. There are a bit over 600,000 self managed super funds that are now in operation according to the latest statistics of the Australian Taxation Office. It turns out that Aussies like saving and the SMSF sector is giving them the opportunity to do that and live a happy retirement with no worries. The actual applying process for an SMSF can be a bit tricky and hard to follow because there are many things to keep in mind, so don’t just jump into decisions right away. Read thoroughly, inform yourself and only then start the application process. We all know that all things that are super and tax related are not that easy and simple as they seem. Many aspects of the SMSF program can be confusing for many, but with a proper introduction and information getting that super fund will be as easy as a cherry pie.

actuarial certificate

In this article we’ll talk about one aspect of the SMSF – the actuarial certificate. Many people ask what is it? Why do I need it? How do I get it? Let’s start step by step. An actuarial certificate is a statement by a qualified actuary who confirms the proportion of an SMSF’s income that should be exempt from income tax. This means that you’ll need an actuarial certificate if you want to claim a tax exemption on the SMSF’s income whilst paying a super income stream benefit. Once you realize you need the actuarial certificate, you’ll need to provide the actuary with significant amount of information to calculate the applicable percentage, including some details of every pension payment and every contribution made to the SMSF during that year.

An actuarial certificate is needed when the fund has a combination of pension and accumulation assets and this includes:

  • When any portion of the assets are unsegregated;
  • When the assets in the fund are initially segregated but later become unsegregated or have unsegregated transactions at any time in the year;
  • When the fund has reserve accounts at any time throughout the year.

The actuarial certificate is not needed when pension assets are segregated or kept separate from accumulation assets. This usually occurs when all members of the SMSF are drawing pensions and are no longer making contributions which means all assets of the SMSF are pension assets. Segregation also happens when the assets of various members are kept separate, when there are totally different bank and investment accounts for all the members. And obviously, an actuarial certificate is not required when the SMSF has a loss in taxes.

If things became clearer, locate yourself in the group you belong. If you think you’ll need an actuarial certificate, talk with professionals who will explain you every little detail that seems confusing. When applying for an SMSF make sure you find the right specialists that will guide you on the way, a team that will offer you comprehensive explanations and will deliver all kinds of SMSF services that will be of a big help for you.