Heffron principal Meg Heffron said the delay might result in a legislative change, with suggestions Treasury had intervened as the mediator between the Australian Taxation Office (ATO) and superannuation professionals on the contentious issue.
“The rumour is Treasury has stepped in as the peacemaker and said ‘well, the tax office thinks the law says this, a pension ends when someone dies, while the industry says first of all we don’t agree with the legislative interpretation and second of all we don’t like and it even if you’re right, that’s not what we want’, and Treasury is in the middle there saying perhaps some kind of legislative solution is needed here,” Heffron said.
“I’m holding out some hope that we might see some kind of legislative change on that issue. I don’t think the tax office will change its view. I think the only thing that will result in any change there is new legislation.
“Perhaps something like: when someone dies, there’s a six-month amnesty and you’re not taxable during that period, but if you don’t pay the death benefit out in time, then it becomes taxable again. I’m speculating wildly there, but my hope is that one of the reasons for the delay is that there is some chance of that.”
Heffron pointed out the debate over the starting and ceasing of pensions had hidden other important issues also needing to be addressed.
These include how to treat a situation where someone dies with three pensions, and what to do in a situation where a pension has stopped because it has been underpaid.
“The information I have is that these issues are not going to be dealt with in the final ruling to any greater extent than they were in the original,” Heffron said.
“What we are going to see is a shorter ruling dealing with fewer issues than the draft dealt with, but with separate ATO product for a whole host of other issues like the ones I just mentioned,” she said.
