Overview
The steps below can be followed to convert a TRIS to a TRIS - Retirement Phase.
From 1 July 2017, the pension earnings exemption has been completely removed for income derived from assets supporting a TRIS.
This means that any income derived when a member is in TRIS phase will be taxed at the fund tax rate (15%).
A TRIS - “Retirement Phase” was introduced as part of the reform for members to obtain the pension earnings exemption in certain circumstances:
- Meeting the condition of release of ‘retirement’;
- Meeting the condition of release ‘permanent incapacity’;
- Meeting the condition of release ‘terminal medical condition’;
- Attains age 65 and satisfies a 'nil' cashing restriction.
This Retirement Phase interest comprises pension interests that are of a tax-free nature and will have an effect on a member's personal Transfer Balance Account; in contrast to a TRIS which is not comprised of amounts in the tax-free environment.
When is a TRIS eligible to convert to the Retirement phase?
With reference to the Income Tax Assessment Act 1997 s307-80:
307-80(1)
A *superannuation income stream is in the retirement phase at a time if a *superannuation income stream benefit is payable from it at that time.
307-80(2)
A *superannuation income stream is also in the retirement phase at a time if:
(a) it is a *deferred superannuation income stream; and
(b) a *superannuation income stream benefit will be payable from it to a person after that time; and
(c) the person has satisfied (whether at or before that time) a condition of release specified in any of the following items of the table in Schedule 1 to the Superannuation Industry (Supervision) Regulations 1994:
(i) 101 (retirement);
(ii) 102A (terminal medical condition);
(iii) 103 (permanent incapacity);
(iv) 106 (attaining age 65).
However, it is important to note that under s307-80(b)(ii) that the TRIS is not in the Retirement Phase unless the member has notified the trustee of the SMSF that a condition of release has been met.
Instructions
| From the Main Toolbar, go to Member. |
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| Select Member list. |
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- Select Convert to TRIS (Retirement Phase) next to the relevant TRIS member.
- Input the conversion date. This will present the balance to convert. If this change is partway through the year, you will need to complete the Create Entries Process up until the day before the change.
- Confirm the rollover and preservation components. Select Save and Prepare Documents to proceed with the conversion and to prepare documentation.
- A TRIS - Retirement Phase conversion will impact a member's Transfer Balance Cap. Refer to Transfer Balance Dashboard for more.
TRIS Pension Conversion Letter/Minutes
Select Save and Prepare Documents to produce the TRIS Conversion Letter/Minutes. These can also be prepared from the Reports screen at a later stage.
- From the Main toolbar, select Report.
- From the Reports screen, under the Letters/Minutes section, drag and drop the TRIS Pension Conversion Letter/Minute to the landing page.
- Select Preview Reports to download the documents. These documents can also be included as part of a Report Pack.
Delete/Reverse a TRIS to Account-Based transfer
To delete/reverse a TRIS to Account Based Pension transfer, in the Transaction List, use the Transaction Filter to filter the screen by the Description "Transition to Retirement".
"Transition to Retirement Pension converted to TRIS (Retirement Phase)" is the actual description.
To improve the filter's accuracy, also filter the Transaction List by the date of the pension transfer.
Locate the batch of journals presented in the search result and select the checkbox to the left of them. Next, select the Delete icon.
You can also quickly select all checkboxes by selecting the "Select All" option appearing in the drop-down menu for the top checkbox to the left of Select.
Edit the member's Pension Type
| From the Main Toolbar, go to Member. |
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| Select the Member list. |
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- From the Member List screen, select the member account
- The Pension Type can be changed to the original pension type.
