Pension shortfall

Ian Coulson

• 10 March 2025 01:13

My client has failed to draw down the minimum pension for 2024. Following the ATO paper, SMSF Technical - Pensions, we are able to self-assess and the shortfall has now been drawn down with in 5 days of it coming to light. The paper says that the pension can be treated as having been made in the previous financial year so presumably the members pension account will be debited and the total pension will be the correct minimum. In accounting for the other side (ie, the credit), should I create a liability account - Pension Owing or is it dealt with in some other way?

0

• Official comment

  

  Andre Jones

  • 11 March 2025 05:57

  Hi Ian, 

  Thank you for creating a community post. 

  In this situation, there are a couple of different ways of dealing with the issue.

  1. The first is to make a transaction of the pension payment at the start of the financial year, using the Pension Payment account (41600). This will decrease the member's pension balance. However, the minimum pension amount will be incorrect in Simple Fund 360. You can use the transaction as evidence that minimum pension payments were met.        
  2. The second option is to reopen the previous financial year and post the pension payment transaction at the end of the financial year. With this option, the minimum pension payment amounts will be correct in the next financial year, however, you may need to amend the Tax Return for the previous financial year. For instructions on how to make an amended tax return, press here. 

  It recommended that you use the pension payment (41600) account in this scenario, as this is the account designed to feed into the minimum pension payment report.  

  If you would like to discuss these options in greater detail, feel free to log a support call. Our Support Consultants can help with the specifics of this situation.  

  Please let me know how you go with this.

Please sign in to leave a comment.