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ARTICLE · 21 JUNE 2017

Media release: ATO throws a one-off lifeline to death benefit pensions in PCG 2017/6

Cooper Grace Ward
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This is a significant opportunity to leave the excess over the transfer balance cap within the superannuation system.

AustraliaTax
Scott Hay-Bartlem
Scott Hay-Bartlem
Clinton Jackson
Clinton Jackson
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The ATO has made a significant concession regarding death benefit pensions in Practical Compliance Guideline (PCG) 2017/6, and advisers should be aware – and taking advantage – of it where appropriate, says Cooper Grace Ward partner Scott Hay-Bartlem.

'The transfer balance cap rules still apply to death benefit pensions,' explains Mr Hay-Bartlem. 'However, a death benefit pension that started before 1 July 2017 continues to be a death benefit, so any commutation of a death benefit pension can only be to a lump sum. The recipient cannot commute any part of the death benefit pension back to accumulation phase.

'This means the balance of a death benefit pension over the transfer balance cap at 1 July 2017 must leave the superannuation system as a lump sum, and cannot be commuted back to accumulation phase.

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