While self-managed super funds (SMSF) provide more freedom with investment choices, there are some important things to be aware of when it comes to managing your fund. One of these is an actuarial certificate. We’ve pulled together a guide on some key information you need to know.
Prepared by an actuary, an actuarial certificate verifies how much of a self-managed super fund’s (SMSF) earnings have come from the fund’s accumulation account and retirement account and calculates the percentage of income that will be exempt from tax, says Stephen Welsh of Clayton & Foster Accountants.
An SMSF can have two types of accounts within the fund: an accumulation account and a pension account. The accumulation account can accept contributions, while pension accounts are used to pay the member a regular income stream or a lump sum when they decide to access their super. The tax implications for both accounts are different, so an actuarial certificate allows you to claim a proportion of earnings as tax-exempt in your annual tax return.
The following table contains details of the superannuation funds rated by Canstar. This table has been sorted by three-year performance (highest to lowest). For more on superannuation and to compare super funds, click here.
Please note that the performance information shown in the table is for the investment option used by Canstar in rating of the superannuation product.
To view the past performance of all super funds, rated by Canstar, use our comparison tool:
The cost of an actuarial certificate can range from $120 up to $450, according to Mr Welsh. The cost can vary depending on the complexity of your situation and the actuary preparing the certificate.
You will need an actuarial certificate if your SMSF has both an accumulation and a pension account during a financial year and is earning, or did earn, investment income which was allocated to both accounts in that financial year. Put simply, an actuarial certificate will be required each year that there is at least one member in each account, said Mr Welsh. Another consideration is if you have a segregated or unsegregated fund, which will also affect if you need an actuarial certificate.
There are two methods of calculating how much of your income can be exempt from tax – or what’s called exempt current pension income (ECPI) – said Mr Welsh:
[optin-monster-shortcode id=”oyubwapynnjzfdtemrml”]
Actuarial certificates can generally be ordered online with a licensed actuary. Alternatively, your SMSF accountant may order you one when preparing annual financial statements through integrations with accounting software platforms and the actuary.
Before you enlist the services of an actuary, it’s a good idea to speak to a financial adviser to discuss your individual circumstances and how your SMSF may affect your tax.
Cover image source: lovelyday12/Shutterstock.com.
This article was reviewed by our Finance and Lifestyle Editor Shay Waraker before it was updated, as part of our fact-checking process.
This advice is general and has not taken into account your objectives, financial situation, or needs. It is not personal advice. Consider whether this advice is right for you, having regard to your own objectives, financial situation and needs. You may need financial advice from a suitably qualified adviser. For more information, read Canstar’s Financial Services and Credit Guide (FSCG) and our detailed disclosure. Canstar may receive a fee for referring you to a product provider – for further information, see how we get paid.
Canstar is a comparison website, not a product issuer, so it’s important to check any product information directly with the provider. Consider the Product Disclosure Statement (PDS), Target Market Determination (TMD) and other applicable product documentation before making a decision to purchase, acquire, invest in or apply for a financial or credit product. Contact the product issuer directly for a copy of the PDS, TMD and other documentation.
Canstar is an information provider and in giving you product information Canstar is not making any suggestion or recommendation about a particular credit product or loan. If you decide to apply for a credit product or loan, you will deal directly with a credit provider, and not with Canstar. Rates and product information should be confirmed with the relevant credit provider. For more information, read the credit provider’s key facts sheet and other applicable loan documentation for that product. Read the Comparison Rate Warning.
Canstar is not authorised or registered to provide tax advice. Canstar does not provide legal or accounting advice. This article has been prepared for information purposes only and is not intended to provide and should not be relied upon for tax, legal or accounting advice. We recommend you seek advice from a qualified and registered (where applicable) professional adviser before making any financial or purchase decision.
All information about performance returns is historical. Past performance should not be relied upon as an indicator of future performance; unit prices and the value of your investment may fall or rise.
Canstar is an information provider and in giving you product information Canstar is not making any suggestion or recommendation about a particular product. The information has been prepared without taking into account your individual investment objectives, financial circumstances or needs. Before you decide whether or not to acquire a particular financial product you should assess whether it is appropriate for you in the light of your own personal circumstances, having regard to your own objectives, financial situation and needs. You may wish to obtain financial advice from a suitably qualified adviser before making any decision to acquire a financial product. Please refer to the product disclosure statement (PDS) and Canstar’s Financial Services and Credit Guide (FSCG) for more information, and read our detailed disclosure, important notes and liability disclaimer.
The information in this article is not legal advice, nor is it intended to be used as a substitute for obtaining independent professional advice. Please consult your legal practitioner, professional adviser or the relevant government or statutory authorities before making any decisions.
The views, opinions, and positions expressed in this piece are the views of the author(s) alone, and do not necessarily reflect the views of Canstar.
*We are Australia’s Biggest Financial Comparison Site. Click here to learn more
This advice is general and has not taken into account your objectives, financial situation or needs. Consider whether this advice is right for you. Consider the product disclosure statement and target market determination before making a purchase decision. Canstar provides an information service. It is not a credit provider, and in giving you information about credit products Canstar is not making any suggestion or recommendation to you about a particular credit product. Research provided by Canstar Research AFSL and Australian Credit Licence No. 437917.