Awan Hammad

    Hi Nayan

    Thanks for the question. I assume the underpaid pension is greater than 1/12th.

    My view is that technically you cannot accrue the unpaid pension as at 30 June 2023 by treating it as an unpresented cheque.

    The ATO addressed a similar issue at:

    SMSF minimum pension payment requirement and exception FAQs

    The example they use is:

    “Example: electronic funds transfer on 30 June falls on a weekend

    A trustee arranged for an electronic transfer for the minimum annual pension payment on 30 June, which was on a weekend.

    Payment using an electronic funds transfer is made when it is received by the member. Where it is processed overnight or later, the Commissioner’s view is that it is made on or after 1 July in the following income year.

    The minimum pension requirement would not be satisfied. The trustee needs to demonstrate that matters outside of their control affected their ability to meet the requirements. Only then can we consider whether the other conditions relevant to the exception can apply.

    Where there is a simultaneous debit and credit of the SMSF’s and member’s accounts linked at the same institution and the funds are available immediately for use by the member, the pension payment is made on 30 June.

    The trustee must provide evidence such as a receipt of the amount into the member’s account to establish the timing of the payment.”

    That is based on the above ATO example in your example the minimum pension has not been paid by 30 June 2023.

    The trustees can write to the ATO and request that the SMSF be treated as having paid the minimum pension in the year ended 30 June 2023. In the same ATO link referred to above it explains how the trustees can apply to the ATO.

    If other forum members have a view on this question please let the forum know.


    The Auditors Institute


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