The ATO fact sheet, issued by the Commissioner states that he has the right to exercise his power of general administration. This allows the SMSF to continue claiming its Exempt Current Pension Income (ECPI) if the minimum pension has not been paid under the following circumstances:
- The trustee had made an honest mistake or the non-payment is due to a matter which was not within the control of the trustee.
- The amount not paid is considered a small underpayment (this is defined by the commission as equal or less than one twelfth of the minimum payment required)
- The fund would otherwise have been entitled to the tax concessions as they were in pension mode
- A catch-up payment (paid within 28 days of realisation) is made as soon as practicable (i.e. minimum pension not paid in 2012/13 with catch-up payment made during 2013/14)
- The trustees have not previously been granted this exemption.
However, ATO only allows a once-off exemption. Therefore, Trustee is advised to exercise care and ensure that the minimum required pension is duly paid.
Clarifying minimum pension payment — ATO fact sheet