Following our announcement on 9 November 2017 on when self-managed super funds (SMSFs) need to report events affecting their members’ transfer balance, we have developed this article you can use as a quick reference guide. The ATO put out this guidance on 5 Dec 2017.

Events you need to report

You only need to report events that affect an individual’s transfer balance. Common events include:

  • income streams a member was receiving just before 1 July 2017 continued to be paid to them on or after 1 July 2017 and that are in the retirement phase
  • new retirement phase income streams
  • commutations of retirement phase income streams.

This does not include investment earnings, gains or losses, or pension payments.

How often you need to report

SMSFs can report events, when they lodge their Annual Return, where each member’s total superannuation balance is less than $1 million. These are events which impact their members’ transfer balances at the same time that the SMSF lodges its SMSF annual return.

SMSFs will need to report within 28 days of the quarter in which a relevant event happens, if they have any member with a total superannuation balance of $1 million or more. This is for events happening on or after 1 July 2018.

SMSF’s should report 2017-18 events (pre 1 July 2018 events)at the same time the SMSF’s first Transfer Balance Account Report (TBAR) form is due. This is either:

  • at the time they lodge their SMSF annual return – for those reporting annually.
  • on 28 October 2018 – for those reporting quarterly.

SMSF’s will need to report a pre-existing income stream, by 1 July 2018. It must do so via its first TBAR. A pre-existing income stream is an income stream the member was receiving on 30 June 2017, which continued to be paid to them on or after 1 July 2017 and which are in the retirement phase.

If the first time, an SMSF member is in retirement phase, is on or after 1 July 2018, the SMSF will need to assess its reporting position (ie, whether each of its is under $1 million threshold), on the 30 June immediately prior to the start of the relevant income stream. This will set the reporting framework for the fund. A fund will not move between annual and quarterly reporting regardless of fluctuations to any of its members’ balances.

Events you need to report sooner

If a member exceeds their transfer balance cap, you must report the events sooner:

  • A commutation of an income stream, in response to an Excess Transfer Balance Determination we have issued to an SMSF member, must be reported 10 business days after the end of the month in which the commutation occurs.
  • Responses to Commutation Authorities must be reported within 60 days of the date the Commutation Authority was issued.

In some situations we strongly encourage you to report earlier. There are two situations you should be aware of:

  • If an SMSF member rolls over their super benefit into an APRA-regulated fund and starts an income stream there, and it is not reported to us by the SMSF at the time it happens, a double-counting of the member’s income streams will occur. This is because there will be a mismatch in timing of the reporting done by the APRA-regulated fund and the SMSF.
  • If an SMSF member was in excess at 1 July 2017 and rectifies it by 31 December 2017 but does not report the rectification to us when the 30 June 2017 pension balances are reported, we will not know that the member has rectified the excess.

In both these situations, there is real risk of us incorrectly issuing an Excess Transfer Balance Determination and a Commutation Authority. This could lead to an increase in administrative costs for the SMSF.

To avoid this, you are encouraged to report commutations prior to a roll-over at the time of the roll over and a commutation that rectifies a small excess under the transitional rules at the time you report the initial income stream.

Changes to the TBAR paper form and instructions

In response to your feedback, we have updated the paper Transfer Balance Account Report (TBAR) form to:

  • allow a fund to report up to four events for a member on a single form
  • make it clearer on how to report a pre-existing income stream for a member.

[ATO website: Transfer Balance Reporting; FJM; LTN 233, 5/12/17; Tax Month Dec 2017]

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