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Disregarded Small Fund Assets (DSFA)

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When the DSFA rule applies, the SMSF is required to use the Proportionate Method to calculate the ECPI for the entire Financial Year and obtain an Actuarial Certificate.

 
 
What are Disregarded Small Fund Assets (DSFA)?

An SMSF is deemed to have disregarded small fund assets (DSFA) when:

  1. The SMSF has a balance in the Retirement Phase Account at any time during the reporting Financial Year; and

  2. Any member of the SMSF has a Total Superannuation Balance (i.e. the sum of all Non-Retirement Phase and Retirement Phase superannuation interests across all Superannuation Funds, not just the SMSF) of more than $1.6 million on 30 June of the previous Financial Year; and

  3. That member is receiving a Retirement Phase Pension from any Superannuation Fund (not necessarily from the SMSF).

 
 
From 1 July 2017 to 30 June 2021

Between 1 July 2017 and 30 June 2021, when the DSFA rule applies (even if the SMSF is 100 % in Retirement Phase at all times of the Financial Year), the SMSF is required to use the Proportionate Method to calculate the ECPI for the entire Financial Year and obtain an Actuarial Certificate. The tax exempt percentage calculated by the Actuary is applied to the SMSF’s Total Income for the entire Financial Year.

Example:

Barney is the sole member of his SMSF and he had an SABP in the SMSF with a balance of $1 million on 30 June 2020. He also had a balance of $800,000 in the Accumulation Account in another Superannuation Fund on 30 June 2020. Barney did not make any contribution or rollover into the SMSF during the 2021 Financial Year and his SMSF consists of only balance in the Retirement Phase Pension. The SMSF will still be required to obtain an Actuarial Certificate for the 2021 Financial Year stating that all income during the year is tax free given that Barney has a Total Superannuation Balance of more than $1.6 million on 30 June 2020 (i.e. $1 million + $800,000).

 
 
After 1 July 2021

After 1 July 2021, if the SMSF is 100% in Retirement Phase at all times of the reporting Financial Year, the DSFA rule does not apply. The SMSF is required to use the Segregated Method to calculate the ECPI for the entire Financial Year and is not required to obtain an Actuarial Certificate. The SMSF’s Total Income for the entire Financial Year is 100% tax exempt.

Otherwise (if the SMSF is not 100% in Retirement Phase at all times of the reporting Financial Year), the DSFA rule applies when the SMSF meets the three requirements detailed in the first section. The SMSF is required to use the Proportionate Method to calculate the ECPI for the entire Financial Year and obtain an Actuarial Certificate. The tax exempt percentage calculated by the Actuary is applied to the SMSF’s Total Income for the entire Financial Year.

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No Advice Express or Implied: The contents of this website are of a general nature only and have not been prepared to take into account any particular investor's objectives, financial situation or particular needs. ESUPERFUND does not provide financial product advice or recommend any financial products either expressly or implied. ESUPERFUND expressly states that it does not recommend, represent as suitable, or endorse any financial product or service available through ESUPERFUND. This applies equally to those financial products which are established for your SMSF when you become a client of ESUPERFUND. Any information provided in relation to any financial product or service available through ESUPERFUND is factual information only about the operation of the account and how data is made available to ESUPERFUND. Where this website refers to a particular financial product then you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the PDS before making any decision about whether to acquire the product. We also recommend that you should seek professional advice (see below) from a financial adviser before making any decision to purchase any financial product referred to on this website. While the sources for the material are considered reliable, responsibility is not accepted for any inaccuracies, errors or omissions.

Seek Professional Advice from a Financial Adviser: ESUPERFUND is a no advice model and does not provide financial, legal or tax advice to clients. We recommend that you seek appropriate professional advice in view of your personal circumstances. A licensed financial adviser will consider your personal situation and make a recommendation suitable to your financial needs. All information detailed on our website is purely factual and is general in nature. Accordingly, you should not rely on it. It should always be remembered that Trustees are legally responsible for all the decisions made even if you obtain advice from a Financial Planner. Whilst a Financial Professional can provide advice and assistance you are ultimately responsible for the Fund.

Fees: Fees relating to operating your SMSF with ESUPERFUND are detailed on our fee page here. When setting up a SMSF it is important to understand that additional fees may apply that must be carefully considered prior to making a decision to setup a SMSF including an ATO Supervisory Levy, Company Trustee Setup Fee (where applicable), and Investment Fees.