Cost Base Management on Pension Phase

The Draft Ruling has highlighted a tax management issue which is vital in pension phase.  While a super interest is supporting a pension, capital gains and income arising from assets allocated to that interest will be tax exempt.

However, if the super interest reverts to taxable phase – possibly because the primary pensioner has died and the nominated reversionary pensioner has previously died – then having assets with cost bases which have not been refreshed in pension phase will be a significantly lost opportunity.

Where possible and practical, the cost bases of assets supporting a pension should be regularly refreshed to reduce the spread between the cost base and market value.