The Future of ECPI

The Future of ECPI

Just when we have all got comfortable with the way ECPI is calculated in Actuarial Certificates, further changes are in train...

No doubt you will recall the ECPI changes that took effect from the 2017-18 financial year.  These were:

• Income from TRIS pensions is no longer exempt
• Assets can now be segregated for part of a year.  As a result, we would often have the situation where the ECPI calculated in an Actuarial Certificate would only apply for part of a year.  This can be confusing and creates extra work.
• Assets can only be segregated if the fund does not have Disregarded Small Fund Assets.

Lime Actuarial, The Institute of Actuaries, the SMSF Association and other bodies have lobbied the government, suggesting that these changes (especially the 2nd change listed above) were causing confusion and inefficiencies.  In the May 2019 budget, the government announced that SMSF Trustees would be able to choose whether assets would be treated as unsegregated for the entire year or only for part of the year.  It isn't clear when and how this choice will be made.  We eagerly await draft legislation which has been delayed due to COVID.  The new rules will now only apply from July 2021 onwards.

THIS ARTICLE WAS CORRECT AT THE TIME OF WRITING. SMSF RULES CHANGE OVER TIME AND THE ARTICLE MAY BE LESS RELEVANT IN THE FUTURE.