Assume that a SMSF is in pension mode, has the surviving spouse of a couple as a member and that member is not well. In that case, it would pay you to examine what unrealized capital gains are presently sitting in the Fund.

As part of taking care of their affairs, you might suggest that they realize any significant capital gains while they are still alive and the fund is in pension mode, given that income and gains on assets supporting a pension are tax-free.

Once a member has died and there is no reversionary pension beneficiary, the fund’s pension mode is considered to have terminated. Therefore, any assets of a SMSF realized after a member has died will potentially be subject to capital gains tax.