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How can market value exceed account balance?

Discussion in 'Superannuation, SMSF & Personal Insurance' started by netd, 28th Jun, 2012.

  1. netd

    netd Member

    Joined:
    15th Jun, 2012
    Posts:
    12
    Location:
    Sydney, NSW
    Hi,
    Can someone please explain what the ATO is trying to say here;

    "If the market value of the assets supporting an income stream benefit exceeds the member account balance supporting the benefit, the excess amount won't be considered to be segregated current pension assets."
    from Self-managed super funds and tax exemptions on pension assets

    Wouldn't the member account balance always be equal to the market value of the assets?
    Can someone give an example of how the market value of the assets supporting an income stream benefit can exceed the member account balance supporting the benefit?
    Thanks.
     
  2. Superman

    Superman Well-Known Member

    Joined:
    6th Nov, 2007
    Posts:
    343
    Location:
    Gold Coast, QLD
    Yes - they will generally be the same.

    It is basically saying that anything NOT supporting a members pension account will NOT be considered as segregated, and the tax exemption will not be applicable for that amount.

    So if you had some assets that were part of an accumulation account (i.e. from contributions) but you were still using the income from those assets to go towards the pension being taken by the pension members, I guess the market value of the assets supporting the income stream (i.e. the income physically generated and being taken out by the pension member) would be higher than the members account balance.

    Clear?

    Don't over think it. Your accountant will know whether an actuarial certificate is required or not - don't lose sleep over it.

    Thanks
    SM :)