The United Kingdom (‘UK’) tax authority, HM Revenue & Customs (‘HMRC’), has recently notified superannuation funds in Australia (including SMSFs) that are registered as Qualifying Recognised Overseas Pension Scheme (QROPS) of new UK regulations that apply from 6 April 2015.
Broadly, the new UK regulations require, among other things, that the fund rules do not allow benefits to be paid prior to age 55 unless the member is retiring due to ill-health as defined under the UK rules.
The HMRC notification requires confirmation on, among other things, whether a fund meets this new regulation. Failure to reply within the deadline may result in HMRC excluding the Fund from the QROPS register and other potentially adverse consequences if further UK transfers are made to that fund.
Note that the conditions of release in the Superannuation Industry (Supervision) Regulations 1994 (Cth) (‘SISR’) include numerous instances where a member may be paid a benefit under 55 years other than for permanent incapacity (the SISR definition of ‘permanent incapacity’ also differs markedly to the UK definition of ‘ill-health’). Some of these payment conditions under Australian law are payments based on temporary incapacity, compassionate grounds, severe financial hardship and for an ATO release authority amount in respect of excess contributions. Naturally, the conditions of release, represent a far wider scope for payment of benefits under age 55 than that permitted by the UK regulations.
DBA Lawyers has therefore prepared a unique deed of variation, detailed covering letter, trustee resolutions and appropriate member disclosures that amends an SMSF’s governing rules, to provide the basis for a trustee to confirm that the UK regulation above is satisfied. This set of documents is comprehensive and available by using our SMSF deed update form at http://www.dbalawyers.com.au/smsf-deed-update/ and by forwarding the form to us with special instructions together with the HMRC notification, current deed and any other relevant information. An estimate will issue soon after receipt.