If you’re moving into the retirement zone — and for those of you already there — the date at which you should draw down your pension from a self-managed super fund (SMSF) is drawing near.
June 30 is the date the Australian Taxation Office (ATO) asks all those on a standard account-based pension income stream to withdraw their minimum annual payment.
If you’re aged 60 years or older and you don’t withdraw that minimum amount you risk the ATO putting a stop to your SMSF’s tax-free income stream.
No one needs that.
According to SMSF Association CEO Andrea Slattery, the budget’s proposed pension changes mean if you are a SMSF member already in pension mode you need to start thinking about how your investments are structured.
“To plan for the new rules they need to think about segregating high-earning assets to pension accounts to ensure tax effectiveness after July 1, 2017, what alternative tax-effective investments are available outside super, and can lower their tax bill by using [low income tax offset] and [senior Australian and pensioner tax offset] rather than 15 per cent tax in accumulation,” Slattery told The Australian.
It is the ATO that sets the minimum amount that you must withdraw from your account-based pension, based on an annual percentage rate that is applied against the balance of your pension account.
If you are under the age of 65, you must withdraw at least 4 per cent of your pension account balance each year.
While there is a standardised minimum, there is no limit to the amount you can withdraw.