Additional Reporting obligations for SMSFs
In line with the introduction of the transfer balance cap (TBC), the Australian Taxation Office (ATO) has introduced new reporting obligations for Self Managed Superannuation Funds (SMSFs).
In order to assist the ATO in tracking movements in an individual’s Transfer Balance Account (TBA), SMSFs are required to report events that impact the account from 1 July 2018. This gives the ATO the ability to track each individual’s TBA and to administer the tax consequences in the event that the TBC is exceeded.
SMSFs are required to report any time that one of the members has had an event which impacts their TBA, such as commencement of a new income stream, commutations of existing pensions, cessation of a superannuation income stream or structured settlement contributions received on or after 1 July 2017. Additionally, all funds that have existing income streams at 30 June 2017 need to report these by 1 July 2018.
Generally, these events must be reported to the ATO quarterly – within 28 days of the end of the quarter in which the event occurred. The ATO have granted a concession to funds that only have pension members with total superannuation balances (TSB) of less than $1million, allowing them to report annually at that same time that their annual return is lodged.
The reporting is done via a Transfer Balance Account Report (TBAR) which must be submitted either electronically or via paper form to the ATO. Failure to lodge the form by the required date could mean that the ATO will issue a ‘failure to lodge’ penalty.
As there are tax consequences for exceeding the TBC it is beneficial to ensure activities that impact an individual’s TBA are reported to the ATO as soon as possible.
TBC – Transfer Balance Cap: Limit from 1 July 2017 on the total amount of superannuation that can be transferred into retirement (or pension) phase. Currently $1.6 million.
TSB – Total Superannuation Balance: The value of total superannuation interests on a given date. Used to work out eligibility to make certain contributions.
TBA – Transfer Balance Account: an account maintained by the Australian Taxation Office that tracks superannuation that moves in and out of retirement phase so that Transfer Balance Cap and Total Superannuation Balance amounts can be monitored.
TBAR – Transfer Balance Account Report: Report that advises ATO on Transfer Balance Account movements.
Please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice.