This tool will help you interpret the ATO's rules for actuarial certificates that took effect from the 2017/18 financial year. This includes:

• whether your fund is eligible to use the segregated method for claiming ECPI
• whether an actuarial certificate is required, 
• guidance to help you understand the different components of your ECPI under the new rules, and
• how to fill out the ECPI section of the 2017/18 SMSF annual return

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Estimated time to complete: 5 mins

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Is the fund eligible to claim ECPI using the segregated method?

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The SMSF is ineligible to use the segregated assets method to claim ECPI for the financial year. Please select 'No' to the segregation question in the application form. 

The SMSF is eligible to use the segregated assets method to claim ECPI for the financial year. Please select 'Yes' to the segregation question in the application form. 

Is the fund eligible to claim ECPI using the segregated method?

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The SMSF is ineligible to use the segregated assets method to claim ECPI for the financial year. Please select 'No' to the segregation question in the application form. 

The SMSF is eligible to use the segregated assets method to claim ECPI for the financial year. Please select 'Yes' to the segregation question in the application form. 

The fund contained no non-retirement phase assets and is therefore considered to be 'segregated' for tax purposes. 

When filling in your SMSF annual return, select the 'segregated assets method' for question 10B. All income earned is classified as 'exempt current pension income' and can be entered in question 10A. 

The fund contained no retirement phase assets and did not pay an income stream to members. 

When filling in your SMSF annual return, you can select 'No' to question 10. 

Refer to the Defined Benefit Pension Reports page on the Apricot website for more information. 

The unsegregated method must be used. Even if there are no non-retriement phase assets in the fund, the ATO require an actuarial certificate to be obtained. 

When filling in your SMSF annual return, select 'Yes' to question 10. Your answer to 10A will be your assessable income multiplied by the fund's tax exempt percentage found on your actuarial certificate. Check box 10C to confirm the use of the unsegregated method. 

Even though the fund elected to segregate assets, for the purposes of ECPI the unsegregated method must be used and an actuarial certificate must be obtained. Please ensure you include ALL assets in the actuarial certificate request form. 

When filling in your SMSF annual return, select 'Yes' to question 10. Your answer to 10A will be your assessable income multiplied by the fund's tax exempt percentage found on your actuarial certificate. Check box 10C to confirm the use of the unsegregated method.

All retirement phase assets of the fund were kept in a seperate pool from the non-retirement phase assets over the course of the financial year.
Separate bank sub-accounts may need to have been used to ensure this segregation. Income earned on the segregated retirement phase assets will be 100% tax exempt, while income earned on the non-retirement phase assets will be 100% taxable. 

When filling in your SMSF annual return, you can select the 'segregated assets method' for question 10B. Income earned on the segregated pension assets is classified as 'exempt current pension income' and can be entered in question 10A.

Ensure you exclude the 'elected segregated' portion of retirement assets from the certificate application form.

Please note: If there were periods during the year when 100% of the fund’s assets were in retirement phase, then the ATO require those periods to also be treated as segregated. This is referred to as ‘deemed segregation’ and our actuarial certificate order process will identify this and provide further guidance.

In this example, there are two types of 'exempt current pension income' to be entered in to question 10 of your SMSF annual return. You may need to select both the 'Segregated assets method' (10B) and the ‘Unsegregated assets method' (10C).

The first component is the income earned on the unsegregated portion of the fund multiplied by the tax exempt percentage from your actuarial certificate.
This figure should then be added to entire amount of income earned on the segregated current pension assets (elected and deemed) and this final totalled figure can be entered in question 10A.

The fund contained both retirement phase and non-retirement phase assets during the financial year.

Please note: If there were periods during the year when 100% of the fund’s assets were in retirement phase, then the ATO require those periods to be treated as segregated. This is referred to as ‘deemed segregation’ and our actuarial certificate order process will identify this and provide further guidance.

Consult our 'Complete' page at the end of the actuarial certificate order process for further advice on how to fill out the SMSF annual return.